Eliminations for Upstream Sales

Clean Air Products owns 80 percent of the stock of Superior Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Superior Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows:

Â	Clean Air Products		Superior Filter Company
Â
Â	Debit	Credit	Debit	Credit
Cash and Accounts Receivable	145000	Â	$ 90,000	Â
Inventory	220000	Â	110,000	Â
Buildings & Equipment (net)	270000	Â	180,000	Â
Investment in Superior Filter Stock	268000	Â	Â	Â
Cost of Goods Sold	175000	Â	140,000	Â
Depreciation Expense	30000	Â	20,000	Â
Current Liabilities	Â	$ 150,000	Â	$ 30,000
Common Stock	Â	200,000	Â	90,000
Retained Earnings	Â	472,000	Â	220,000
Sales	Â	250,000	Â	200,000
Income from Subsidiary	Â	36,000	Â	Â
Total	$1,108,000	$1,108,000	$540,000	$540,000

On January 1, 20X8, Clean Air’s inventory contained filters purchased for $60,000 from Superior Filter, which had produced the filters for $40,000. In 20X8, Superior Filter spent $100,000 to produce additional filters, which it sold to Clean Air for $150,000. By December 31, 20X8, Clean Air had sold all filters that had been on hand January 1, 20X8, but continued to hold in inventory $45,000 of the 20X8 purchase from Superior Filter.

Required

a. Prepare all elimination entries needed to complete a consolidation worksheet for 20X8.

b. Compute consolidated net income and income assigned to the controlling interest in the 20X8 consolidated income statement.

c. Compute the balance assigned to the noncontrolling interest in the consolidated balance sheet as of December 31, 20X8 .