Penguin Corporation acquired 80 percent of the outstanding voting stock of Snow Company on January 1, 2010, for $420,000 in cash and other consideration. At the acquisition date, Penguin assessed Snow's identifiable assets and liabilities at a collective net fair value of $525,000 and the fair value of the 20 percent noncontrolling interest was $105,000. No excess fair value over book value amortization accompanied the acquisition.
The following selected account balances are from the individual financial records of these two companies as of December 31, 2011:
Penguin Snow
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $640,000 $360,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 290,000 197,000
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 105,000
Retained earnings, 1/1/11 . . . . . . . . . . . . . . . . . . . . . 740,000 180,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346,000 110,000
Buildings (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358,000 157,000
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . Not given -0-
Each of the following problems is an independent situation:
a. Assume that Penguin sells Snow inventory at a markup equal to 40 percent of cost. Intra-entity transfers were $90,000 in 2010 and $110,000 in 2011. Of this inventory, Snow retained and then old $28,000 of the 2010 transfers in 2011 and held $42,000 of the 2011 transfers until 2012.
LO2, LO3, LO4, LO5
LO3, LO4, LO5, LO7
On consolidated financial statements for 2011, determine the balances that would appear for the following accounts:
Cost of Goods Sold
Inventory
Noncontrolling Interest in Subsidiary's Net Income
b. Assume that Snow sells inventory to Penguin at a markup equal to 40 percent of cost. Intra-entity transfers were $50,000 in 2010 and $80,000 in 2011. Of this inventory, $21,000 of the 2010 transfers were retained and then sold by Penguin in 2011, whereas $35,000 of the 2011 transfers were held until 2012.
On consolidated financial statements for 2011, determine the balances that would appear for the following accounts:
Cost of Goods Sold
Inventory
Noncontrolling Interest in Subsidiary's Net Income
c. Penguin sells Snow a building on January 1, 2010, for $80,000, although its book value was only $50,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.

Determine the balances that would appear on consolidated financial statements for 2011 for
Buildings (net)
Operating Expenses
Noncontrolling Interest in Subsidiary's Net Income