On January 1, 2002, Platte Company purchased 80 percent of the common stock of River Company.
During 2002, River sold inventory to Platte for $1,000,000. The cost of the inventory to River was $700,000. By the end of 2002, one-quarter of the inventory had not been resold by Platte; that inventory was resold to unrelated parties during 2003. Both companies use perpetual inventory systems.
The results of operations for the year 2002 for the two companies are as follows:
Required:
(a.) Give the entry needed in a three-part consolidation workpaper prepared at the end of 2002 to eliminate the effects of the intercompany inventory transfer.
(b.) Compute 2002 consolidated net income.
(c.) Compute the amount of income assigned to the noncontrolling and controlling interest in 2002.