Problem
Company to the book value of the net assets of Strawberry.
As of that date, Strawberry Company reported shares outstanding of $350,000 and retained earnings of $100,000.
The fair value of the non-controlling interest was equal to 20 percent of the book value of the Strawberry Company.
In 2021, Strawberry Company posted a net income of $90,000 and paid dividends of $15,000
In 2022, the Strawberry Company reported net income of $100,000 and paid dividends of $20,000.
The following transactions occurred between the Pie Company and the Strawberry Company in 2021 and 2022:
• Strawberry Company sold equipment to Pie Company for a profit of $50,000 on December 31, 2021. Strawberry Company had originally purchased the equipment for $150,000 and had a book value of $40,000 on December 31, 2021. At the time of purchase, The Pie Company estimated that the equipment still had a useful life of seven years.
• Pie Company sold land with a book value of $80,000 to Strawberry Company on June 28, 2022 for $110,000.
Task
Assuming Pie Company uses the fully adjusted equity method to account for its investment in Strawberry Company, provide all the necessary consolidation entries to prepare a consolidation worksheet for 2022, investment in Strawberry Company.