Separate Income Statements of Pingair Corporation and Its 90%-Owned Subsidiary

question 33

Essay

Separate income statements of Pingair Corporation and its 90%-owned subsidiary, Staunch Inc., for 2014 were as follows:
Additional information:
1. Pingair acquired its 90% interest in Staunch Inc. when the book values were equal to the fair values.
2. The gain on equipment relates to equipment with a book value of $120,000 and a 4-year remaining useful life that Pingair sold to Staunch for $200,000 on January 2, 2014. The straight-line depreciation method is used. The equipment has no salvage value.
3. Pingair sold inventory to Staunch in 2013 and 2014 as shown in the table below. (The 2013 ending inventory is sold in 2014.)
4. Staunch did not declare or pay dividends in 2013 and 2014.
Required:
1. Prepare adjusting/eliminating entries for the consolidation worksheet at December 31, 2014.
2. Prepare a consolidated income statement for Pingair Corporation and Subsidiary for the year ended December 31, 2014.

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Definitions:

Minor

A person under the legal age of adulthood, which varies by jurisdiction, typically below 18 years old.

Apprentice

A person who is learning a trade from a skilled employer, having agreed to work for a fixed period at low wages.

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Restatement Of Contracts

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