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In: Accounting

On January 1, 2012, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000. On January 1, 2018, P Corp sold $120,000 of land to S Corp for cash.

 

On January 1, 2012, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000. On January 1, 2018, P Corp sold $120,000 of land to S Corp for cash. The cost of the land was $50,000 at the date of the transfer. Also on January 1, 2018, P Corp transferred equipment to S Corp for $20,000 cash. The equipment originally cost $26,000 and has a book value of $15,000 (three-year remaining useful life).

During 2019, S Corp sold the land to a third-party for $150,000. The equipment continued to be used by S Corp.

Instructions:

1. Prepare the 2018 journal entries only relating to land and equipment transactions (P Corp and S Corp).

2. Prepare the 2018 consolidation worksheet entries only relating to the land and equipment transactions.

3. Prepare the 2019 journal entries only relating to land sale and equipment transactions (P Corp and S Corp).

4. Prepare the 2019 consolidation worksheet entries only relating to the land and equipment transactions.

Solutions

Expert Solution

Journal Entries

ekkarill92 answered 2 years ago
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