Smith company sold a machine to Pippen On Jan 1, year 14. Smith comp bough the...

Smith company sold a machine to Pippen On Jan 1, year 14. Smith comp bough the machine on january 1, year 11. Straight line deprecation is being used. the original life of the machine was not changed

Orignal Cost to S company 150,000

sales price to pippen company 108,750

original life of machine 8 years

What would the consolidation entries look like for P in year 2016 and how would they affect net income ans book value for year16? p owns 90 percent of s.

thanks

Expert Solution

		Journel Entries in the books of Pippen
S.No	Date	Particular	Amount ₹	Amount ₹
1	01-Jan-14	Machinary A/C Dr.		1,08,750
		To Smith A/C			1,08,750
		( being machine purchased )

2	01-Jan-14	Smith A/C Dr.		10875
		To Bank A/C			10875
		( being Pippen Own 90% to Smith and Paid 10% to Smith )

3	31-Dec-14	Deprication A/C Dr.		21750
		To Accumulated Depreciation A/C			21750
		( being Depreciation made on Machinary on SLM Method for balance life of 5 years
		( 108750 /5 = 21750 )

4	31-Dec-15	Deprication A/C Dr.		21750
		To Accumulated Depreciation A/C			21750
		( being Depreciation made on Machinary on SLM Method for balance life of 4 years
		( 108750 /5 = 21750 )

5	31-Dec-16	Deprication A/C Dr.		21750
		To Accumulated Depreciation A/C			21750
		( being Depreciation made on Machinary on SLM Method for balance life of 3 years
		( 108750 /5 = 21750 )


		Calculation of Book Value in 2016	Amount
		Value of Machinary in 2014	108750
	-	(-) Depreciation 2014	21750
		(-) Depreciation 2015	21750
		(-) Depreciation 2016	21750
			43500

ekkarill92 answered 1 year ago

on Jan 1 of the current year a company purchased and placed in serice a machine...

on Jan 1 of the current year a company purchased and placed in serice a machine with a cost of $240,000. The company estimated the machines useful life to be 4 years or 60,000 units of output with an estimated salvage valus of $60,000. During the current year 12,000 united were produced prepare the necessary Dec 31 adjusting journal entry to record depreciation for the current year assuming the company uses 1) units of production methid deoreciation 2) double declinin...

The following transactions pertain to Smith Training Company for Year 1: Jan.30 Established the business when...

The following transactions pertain to Smith Training Company for Year 1: Jan.30 Established the business when it acquired $54,000 cash from the issue of common stock.Feb.1 Paid rent for office space for two years, $15,100 cash.Apr.10 Purchased $760 of supplies on account.July1 Received $26,000 cash in advance for services to be provided over the next year. 20 Paid $570 of the accounts payable from April 10.Aug.15 Billed a customer $9,200 for services provided during August.Sept.15 Completed a job and received...

Jan 1 Retired a piece of machinery that was purchased on Jan 1 2010. The machine...

Jan 1 Retired a piece of machinery that was purchased on Jan 1 2010. The machine cost $62400 on that date.It had a useful life of 10 years with no salvage. June 30 Sold a computer that was purchased on January 1,2017. The computer cost $35,500. It had a useful life of 5 years with no salvage value. The computer was sold for $14,100. Dec 31 Discarded a delivery truck that was purchased on Jan 1 2016. The truck cost...

Smith Company sold merchandise in the amount of $5,800 to Batter Company on September 1, with...

Smith Company sold merchandise in the amount of $5,800 to Batter Company on September 1, with credit terms of 2/10, n/30. The cost of the merchandise is $2,400. On September 4, Batter Company returns some of the merchandise, which were put back into Smith's inventory. The selling price and the cost of the returned merchandise are $800 and $500, respectively. (Assume both companies use the perpetual inventory method.) Batter Company's journal entry on September 8, when they pay the amount...

1) On Jan. 1, 2014, Westerfeld Company placed into service a machine that had an acquisition...

1) On Jan. 1, 2014, Westerfeld Company placed into service a machine that had an acquisition cost of $70,000, a salvage value of $8,000, and an estimated useful life of 5 years. On Jan. 1, 2017, Westerfeld revised the estimated useful life of the machine to 7 years. How much annual depreciation expense should Westerfield recognize for 2017, using straight-line depreciation? 2) A PP&E asset with a cost of $300,000 and accumulated depreciation of $285,000 is sold for $35,000. What...

1. Smith Company manufactures lawn mowers. The firm had the following inventories. Jan 1, 2019 Dec...

1. Smith Company manufactures lawn mowers. The firm had the following inventories. Jan 1, 2019 Dec 31, 2019 Finished goods $142,000 $ 92,000 Work in process $262,000 $426,000 Materials $114,000 $ 90,000 The following additional data pertains to operations. Material purchased $150,000 Property Taxes Factory $ 7,500 Direct labor $400,000 Utilities-Factory $15,000 Depreciation-Factory Equip $ 25,000 Insurance-Factory $ 4,500 Factory...

CONCEPT CHECK for DEPRECIATION Depreciation Methods — Year 1 Cost of machine (purchased Jan 1) 83,000...

CONCEPT CHECK for DEPRECIATION Depreciation Methods — Year 1 Cost of machine (purchased Jan 1) 83,000 Salvage value 3,000 Useful life in years 5 Useful life in machine hours 100,000 A. Using the information provided above, calculate this truck’s depreciation for Year 1 and Year 2 using the following methods: Year 1 Year 2 1. Straight-line ________________ _______________ 2. Double-declining balance ________________ _______________ 3. Units of activity ________________ _______________ (Year 1 actual hours is 25,000 hrs) (Year 2 actual hrs...

Reeve Corporation purchased a factory machine on JAN 1st, Year 1, for $40,000, estimated a useful...

Reeve Corporation purchased a factory machine on JAN 1st, Year 1, for $40,000, estimated a useful life of 8 years, and estimated Residual Value (Scrap Value) of $4,000. 1. Using the Straight Line Method, calculate Depreciation Expense for Years 1 thru 8. Calculate Book Value for Years Ending 1 thru 8. 2. Using the Double Declining Balance Method, calculate Depreciation Expense for Years 1 thru 8. Calculate Book Value for Years Ending 1 thru 8. Reeve Corporation estimated the factory...

1. Holmes Packaging sold a machine for $49,500. The company bought this machine for $120,000 seven...

1. Holmes Packaging sold a machine for $49,500. The company bought this machine for $120,000 seven years ago and was depreciating it on a straight-line basis over ten years to a $12,000 salvage value. What is the gain (loss) that Holmes Packaging should report? 2. Vermont Industries, a clothing mail-order retailer, purchased a new industrial sewing machine for $156,000. This machine is expected to operate for 5 years after which it will be sold for salvage value estimated to be...

On Jan 1, 2012, Roger Company issued $2,000,000, 9%, 5-year bonds dated Jan 1, 2012, at...

On Jan 1, 2012, Roger Company issued $2,000,000, 9%, 5-year bonds dated Jan 1, 2012, at 97. The bonds pay semiannual interest on Jan 1 and July 1. The company uses the straight-line method of amortization and has a calendar year-end. Prepare all the journal entries on the dates Jan 1 and July 1.

Question