Parts e and f are wrong! below is the reason why these parts were wrong:"I would like you to write out the ED entry so you can see that it decreases depreciation expense. It has a credit to an expense account, which decreases the expense account balance. Therefore, it would not reduce consolidated income, it would increase it. The subsidiary's reported income is separately affected by the ED entry before taking the noncontrolling interest share."Plz, help me! АВа.Upstreamb. Book value (120,000 - 110,000)10,000Transfer price60,000Unrealized gain50,000Excess depreciation10,000Unrealized Net Gain40,000C.Steven Corporationd. Carrying Value before sale10,000Useful LifeDepreciation before no transfer$2,000Transfer Value60,000Useful Life5Depreciation after transfer$12,000Excess Depreciation (12,000 -2,000)$10,000е.Peter's 2020 net income440,000Steven's 2020 net income137,000Excess Depreciation127,000567,000-10,000Total Consolidated Incomef. Noncontrolling interest income (127,000 * 10%) $12,700 Problem 3Peter Company acquired90 %of Steven Corporation on 1/2018. Fair values of Steven's assets and liabilitiesapproximated book values on that date. Peter uses the initial value methodto account for its investment in Steven.On 1/2019, Peter bought equipment from Steven for $60,000 thathad originally cost Steven $120,000 and hadof Accumulated depreciation at the time. The equipment had a five-yearremaining life and was being depreciated using the straight line method.You are preparing the worksheet for the 2020 fiscal year.$ 110,000a. Was this equipment sale upstream or downstream?b. How much unrealized net gain from the equipment transfer remains at thebeginning of 2020? (this is the amount you will need for the "TA entry at 1/2020.)c. Which company's Retained earnings account will be adjusted in the "TA entryin part a? (Which company was the "initiator" of the transaction?)d. How much excess depreciation will there be in each of the first five yearsafter the transfer?e. Peter's 2020 net income, without including any investment income, was$ 440,000 and Steven reported net income of$ 137,000 in 2020.What consolidated income will be reported before removing the noncontrollinginterest's share of the subsidiary's net income? (This includes the effectof the ED entry.)f. What will the noncontrolling interest's share of the subsidiary's net income be for2020? (Consider whether the equipment sale had been upstream or downstream.)

Question

Parts e and f are wrong! below is the reason why these parts were wrong:&#34;I would like you to write out the ED entry so you can see that it decreases depreciation expense. It has a credit to an expense account, which decreases the expense account balance. Therefore, it would not reduce consolidated income, it would increase it. The subsidiary's reported income is separately affected by the ED entry before taking the noncontrolling interest share.&#34;Plz, help me! АВа.Upstreamb. Book value (120,000 - 110,000)10,000Transfer price60,000Unrealized gain50,000Excess depreciation10,000Unrealized Net Gain40,000C.Steven Corporationd. Carrying Value before sale10,000Useful LifeDepreciation before no transfer$2,000Transfer Value60,000Useful Life5Depreciation after transfer$12,000Excess Depreciation (12,000 -2,000)$10,000е.Peter's 2020 net income440,000Steven's 2020 net income137,000Excess Depreciation127,000567,000-10,000Total Consolidated Incomef. Noncontrolling interest income (127,000 * 10%) $12,700 Problem 3Peter Company acquired90 %of Steven Corporation on 1/2018. Fair values of Steven's assets and liabilitiesapproximated book values on that date. Peter uses the initial value methodto account for its investment in Steven.On 1/2019, Peter bought equipment from Steven for $60,000 thathad originally cost Steven $120,000 and hadof Accumulated depreciation at the time. The equipment had a five-yearremaining life and was being depreciated using the straight line method.You are preparing the worksheet for the 2020 fiscal year.$ 110,000a. Was this equipment sale upstream or downstream?b. How much unrealized net gain from the equipment transfer remains at thebeginning of 2020? (this is the amount you will need for the &#34;TA entry at 1/2020.)c. Which company's Retained earnings account will be adjusted in the &#34;TA entryin part a? (Which company was the &#34;initiator&#34; of the transaction?)d. How much excess depreciation will there be in each of the first five yearsafter the transfer?e. Peter's 2020 net income, without including any investment income, was$ 440,000 and Steven reported net income of$ 137,000 in 2020.What consolidated income will be reported before removing the noncontrollinginterest's share of the subsidiary's net income? (This includes the effectof the ED entry.)f. What will the noncontrolling interest's share of the subsidiary's net income be for2020? (Consider whether the equipment sale had been upstream or downstream.)

Accepted Answer

Peter's 2020 net income
 
440,000

Steve's 2020 net income
137,000

Excess depreciation
-10,000…