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

PreviousSave AnswersNext

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Computing the amount of investment income and preparing [I] consolidation entries—Cost method Assume that a wholly...

Computing the amount of investment income and preparing [I] consolidation entries—Cost method Assume that a wholly owned subsidiary sells inventory to the parent company. The parent company, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2015 and 2016: Subsidiary Net Income Intercompany Inventory Sales Gross Profit % Inventory Remaining at End of Year Receivable (Payable) 2016 $1,800,000 $270,000 34% 15% $90,000 2015 $1,440,000 $180,000 30% 18% $72,000...

Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume that...

Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume that on January 1, 2011, a wholly owned subsidiary sells to its parent, for a sale price of $120,000, equipment that originally cost $140,000. The subsidiary originally purchased the equipment on January 1, 2007, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary’s depreciation policy and depreciates the equipment over the remaining useful life...

Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume that...

Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume that on January 1, 2011, a wholly owned subsidiary sells to its parent, for a sale price of $126,000, equipment that originally cost $148,000. The subsidiary originally purchased the equipment on January 1, 2007, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life...

Preparing the [I] consolidation entries for sale of depreciable assets—Equity method Assume that on January 1,...

Preparing the [I] consolidation entries for sale of depreciable assets—Equity method Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $162,000, equipment that originally cost $184,000. The parent originally purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent’s depreciation policy and depreciates the equipment over the remaining useful life of 6 years....

Preparing the [I] consolidation entries for sale of depreciable assets—Equity method Assume that on January 1,...

Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume on Jan. 1, 2016,...

Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume on Jan. 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $162,000, equipment that originally cost $184,000. The parent originally purchased the equipment on January 1, 2012 and depreciated the equipment assuming a 10 year useful life ( straight- line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciated the equipment over the remaining useful life of...

Student is to write a paper describing the consolidation process when a wholly-owned subsidiary acquired at...

Student is to write a paper describing the consolidation process when a wholly-owned subsidiary acquired at more than book value. The paper must clearly present calculations of how amounts were determined and the journal entries required to record the acquisition by the purchaser.

Write a paper describing the consolidation process when there is a less than wholly-owned subsidiary acquired...

Write a paper describing the consolidation process when there is a less than wholly-owned subsidiary acquired at more than book value. Also, the paper must clearly present calculations of how amounts were determined and the journal entries required to record the acquisition by the purchaser.

Luke sold a building and the land on which the building sits to his wholly owned...

Luke sold a building and the land on which the building sits to his wholly owned corporation, Studemont Corp. at fair market value. The fair market value of the building was determined to be $502,500; Luke built the building several years ago at a cost of $375,000. Luke had claimed $56,500 of depreciation expense on the building. The fair market value of the land was determined to be $254,000 at the time of the sale; Luke purchased the land many...

In preparing the consolidation worksheet for Pencil Corporation and its 60 percent–owned subsidiary, Stylus Company, the...

In preparing the consolidation worksheet for Pencil Corporation and its 60 percent–owned subsidiary, Stylus Company, the following consolidation entries were proposed by Pencil's bookkeeper: Worksheet Entries Debit Credit Cash 100,000 Accounts Payable 100,000 To eliminate the unpaid balance for intercorporate inventory sales in 20X5. Cost of Goods Sold 16,800 Income from Stylus Company 16,800 To eliminate unrealized inventory profits at December 31, 20X5. Income from Stylus Company 196,000 Sales 196,000 To eliminate intercompany sales for 20X5. Pencil's bookkeeper recently graduated...

Subjects