Pitcher Corporation purchased 60 percent of Softball Corporation’s voting common stock on January 1, 20X1. On...

Pitcher Corporation purchased 60 percent of Softball Corporation’s voting common stock on January 1, 20X1. On January 1, 20X5, Pitcher received $258,000 from Softball for a truck Pitcher had purchased on January 1, 20X2, for $328,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis. Required:

a. Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare the worksheet consolidation entry or entries needed at December 31, 20X6, to remove the effects of the intercompany sale.

Solutions

Expert Solution

(A)the worksheet consolidated entries as shown below at dec 31 , 20X5

Date	Accounts and explanation	Debit $	Credit $
31-Dec	Gain on sale	61200
	Truck($328000-$258000)	70000
	Accumulated Depreciation		131200
	(To Estimate the gain on sale of truck)

Compute the gain on Sale of Truck as shown Below
Particulars	Amount($)	Amount($)
Amount reccived from Pitcher Corp		258000
Less: Carrying Value of truck
Cost of truck	328000
Accumulated Depreciation ($328000/10Year)*4	-131200	196800

Gain on sale of truck		61200

(B) the worksheet consolidation Shown at December 31, 20X6

Date	Accounts and explanation	Debit $	Credit $
31 Dec 20X6	Investment in Pitcher Corp	61200
	Truck($328000-$258000)	70000
	Accumulated Depreciation		131200
	(To Record the Investment in Pitcher Corp)

ekkarill92 answered 1 year ago

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