On January Pulaski, Incorporated, acquired a percent interest in the common stock of Sheridan, Incorporated, for $ Sheridan's book value on that date consisted of common stock of $ and retained earnings of $ Also, the acquisitiondate fair value of the percent noncontrolling interest was $ The subsidiary held patents with a year remaining life that were undervalued within the company's accounting records by $ and also had unpatented technology year estimated remaining life undervalued by $ Any remaining excess acquisitiondate fair value was assigned to an indefinitelived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. At yearend, there are no intraentity payables or receivables.
Intraentity inventory sales between the two companies have been made as follows:
YearCost to PulaskiTransfer Price to SheridanEnding Balance at transfer price$ $ $
The individual financial statements for these two companies as of December and the year then ended follow:
ItemsPulaski, IncorporatedSheridan, IncorporatedSales$ $ Cost of goods soldOperating expensesEquity in earnings in SheridanNet income$ $ Retained earnings, $ $ Net incomeDividends declaredRetained earnings, $ $ Cash and receivables$ $ InventoryInvestment in SheridanBuildings netEquipment netPatents netTotal assets$ $ Liabilities$ $ Common stockRetained earnings, Total liabilities and equities$ $
Note: Parentheses indicate a credit balance.
Required:
Show how Pulaski determined the $ Investment in Sheridan account balance. Assume that Pulaski defers percent of downstream intraentity profits against its share of Sheridans income.
Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December
