Workpaper Entries—Intercompany Sale of EquipmentPearson Company owns 90% of the outstanding common stock of Spring Company. On January 1, 2011, Spring Company sold equipment to Pearson Company for $200,000. Spring Company had purchased the equipment for $300,000 on January 1, 2006, and had depreciated it using a 10% straight-line rate. The management of Pearson Company estimated that the equipment had a remaining useful life of five years on January 1, 2011. In 2012, Pearson Company reported $150,000 and Spring Company reported $100,000 in net income from their independent operations (including sales to affiliates).Required:Prepare in general journal form the workpaper entries relating to the intercompany sale of equipment that are necessary in the December 31, 2011, and December 31, 2012, consolidated financial statements workpapers.Calculate controlling interest in consolidated income for 2012.
