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Preparing the [I] consolidation entries for sale of land Assume that during 2015 a wholly owned...
Preparing the [I] consolidation entries for sale of land
Assume that during 2015 a wholly owned subsidiary sells land that originally cost $450,000 to its parent for a sale price of $500,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping.
a. Prepare the required [I] consolidation entry in 2015.
| Description | Debit | Credit | |
|---|---|---|---|
| [lgain] | AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer |
| AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer | |
b. Prepare the required [I] consolidation entry required at the end
of each year 2016 through 2018.
| Description | Debit | Credit | |
|---|---|---|---|
| [lgain] | AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer |
| AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer | |
c. Assume that the parent re-sells the land outside of the
consolidated group for $525,000 on December 31, 2019. Prepare the
journal entry made by the parent to record the sale and the
required [I] consolidation entry for 2019.
| Description | Debit | Credit | |
|---|---|---|---|
| AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer | |
| AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer | |
| Land | Answer | Answer | |
| [lgain] | AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer |
| AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales | Answer | Answer | |
d. What will be the amount of gain reported in the consolidated
income statement in 2019?
$Answer
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Solutions
ekkarill92 answered 2 years agoRelated Solutions
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