Question
In: Accounting
On January 1, Year 1, Josh Corp. sold equipment to Mayfair Inc. (its 100% sub) for...
On January 1, Year 1, Josh Corp. sold equipment to Mayfair Inc. (its 100% sub) for $120,000 in cash. The equipment originally cost $160,000 but had a book value of $96,000 when transferred. On that date, the equipment had a five-year remaining life
1. Prepare the consolidation entries relating to the equipment sale for 12/31, Year 1.
2. Prepare the consolidation entries relating to the equipment sale for 12/31, Year 2.
Solutions
Expert Solution
| Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks! |
| Josh Corp. | Amount $ |
| Sale value of equipment | 120,000.00 |
| Less: Carrying value of equipment sold | 96,000.00 |
| Gain on sale | 24,000.00 |
| Original cost of equipment | 160,000.00 |
| Less: Carrying value of equipment sold | 96,000.00 |
| Accumulated depreciation- equipment | 64,000.00 |
| Elimination entry | |||||
| Year | Nature | Account | Debit $ | Credit $ | Note |
| Year 1 | To eliminate gain on sale | Gain on sale | 24,000.00 | ||
| Equipment | 24,000.00 | ||||
| To reinstate Accumulated depreciation | Equipment | 64,000.00 | |||
| Accumulated depreciation | 64,000.00 | ||||
| Year 2 | To eliminate gain on sale | Retained Earnings | 24,000.00 | ||
| Equipment | 24,000.00 | ||||
| To adjust depreciation expense | Accumulated depreciation | 24,000.00 | This is $ 120,000/ 5 years. | ||
| Depreciation expense | 19,200.00 | This is $ 24,000 less $ 4,800. | |||
| Retained Earnings | 4,800.00 | This is $ 24,000/ 5 years. |
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2020, Uniform Co. sold its 2-year old equipment to XYZ Inc. for a...
On January 1, 2020, Uniform Co. sold its 2-year old equipment to
XYZ Inc. for a cash down-payment of P100,000 and a non-interest
bearing note with a face amount of P900,000 due December 31, 2021.
There is no established price for the equipment but its carrying
amount on the company’s books was at P600,000. The prevailing
market rate of interest for similar note of this type on the
transaction date was at 10%. On December 31, 2020 XYZ developed a...
1. During 2012, Parent sold inventory originally costing 60,000 to its 100% Sub for 75,000. Sub...
1. During 2012, Parent sold inventory originally costing 60,000
to its 100% Sub for 75,000. Sub sold all but 10,000 of the
inventory purchased from Parent for 70,000 to external entities.
What is the unrealized gross profit?
2.During 2012, Parent sold inventory originally costing 60,000
to its 100% Sub for 75,000. Sub sold all but 10,000 of the
inventory purchased from Parent for 70,000 to external entities.
What is the gross profit percent?
3.During 2012, Parent sold inventory originally costing...
On January 1, Poe Corp. sold a machine for $4,798,243 to Saxe Corp., its wholly-owned subsidiary....
On January 1, Poe Corp. sold a machine for $4,798,243 to Saxe
Corp., its wholly-owned subsidiary. Poe paid $1.1 million for this
machine, which had accumulated depreciation of $250,000 on the sale
date. Poe estimated a $100,000 salvage value and depreciated the
machine on the straight-line basis over 20 years, a policy that
Saxe continued. In Poe's December 31 consolidated balance sheet,
the accumulated depreciation of this machine should be shown on the
consolidated balance sheet as:
On January 1, ABC Inc. sold used equipment with a cost of $14,500 and a carrying...
On January 1, ABC Inc. sold used equipment with a cost of
$14,500 and a carrying amount of $1,300 to XYZ Inc. in exchange for
a $6,600, three-year non–interest-bearing note receivable. Although
no interest was specified, the market rate for a loan of that risk
would be 7%. Assume that Teal Mountain follows IFRS.
(a) Prepare the entry to record the sale of ABC’s equipment and
receipt of the note.
(b) Prepare the entries to record the recognition of interest...
1. On January 1, 2017, a subsidiary sold equipment to its parent for $520,000. The subsidiary’s...
1. On January 1, 2017, a subsidiary sold equipment to its parent
for $520,000. The subsidiary’s original cost was $200,000 and as of
January 1, 2017, $20,000 in depreciation had been recorded on the
subsidiary’s books. At the date of sale, the equipment had a
10-year remaining life, straight-line. It is now December 31, 2021
(5 years since the sale), and the parent still holds the
equipment.
REQUIRED: Prepare the consolidation eliminating entries for
2021
2. Baracus, Inc. pays $95,000...
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey sold Blue a machine...
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey
sold Blue a machine for $67,405. Immediately prior to the sale, the
machine was recorded on Grey's books at a net book value of
$21,511. Prior to the sale, Grey was depreciating the machine on a
straight-line basis with 5 years of remaining life and no salvage
value. Blue plans to adopt the same depreciation assumptions as
Grey. What elimination adjustments with respect to this sale must
be...
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey sold Blue a machine...
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey
sold Blue a machine for $64,192. Immediately prior to the sale, the
machine was recorded on Grey's books at a net book value of
$21,413. Prior to the sale, Grey was depreciating the machine on a
straight-line basis with 7 years of remaining life and no salvage
value. Blue plans to adopt the same depreciation assumptions as
Grey. What elimination adjustments with respect to this sale must
be...
At the beginning of year 1, sub sold 5 year at 6% for $1,000,000 bonds with...
At the beginning of year 1, sub sold 5 year at 6% for $1,000,000
bonds with annual interest payment when market was 8%. At the end
of the first year, the parent of the sub purchased 80% of these
bonds when market was at 3%. Prepare all the necessary journal
entries and eliminations for the 5 years, assume interest method
was used by sub and parent.
On January 1, 2017, a subsidiary sold equipment to its parent for $520,000. The subsidiary’s original...
On January 1, 2017, a subsidiary sold equipment to its parent
for $520,000. The subsidiary’s original cost was $200,000 and as of
January 1, 2017, $20,000 in depreciation had been recorded on the
subsidiary’s books. At the date of sale, the equipment had a
10-year remaining life, straight-line. It is now December 31, 2021
(5 years since the sale), and the parent still holds the equipment.
REQUIRED: Prepare the consolidation eliminating entries for
2021
Scape Corp. manufactures telephony equipment. Scape leased equipment to User, Inc. on January 1, 2018. Scape...
Scape Corp. manufactures telephony equipment. Scape leased
equipment to User, Inc. on January 1, 2018. Scape produced the
equipment at a cost of $5,100,000. Lease description: Quarterly
rental payments $464,353 at beginning of each period Lease term 6
years (24 quarters) No residual value; no BPO Economic life of
equipment 6 years Implicit interest rate and lessee’s incremental
borrowing rate 12% Fair value of asset $8,100,000 Required: Prepare
appropriate entries for both User and Scape from the beginning of
the...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Question 2 : Aggregate Scores: Write a program that opens 2 files, quiz.txt, and hw.txt. The...
- Define the term symbiosis specifically as it applies in a biological context. Compare and contrast parasitism,...
- A research team conducted a study showing that approximately 20% of all businessmen who wear ties...
- Research the internet for companies that have executed data science projects. Pick one company and describe...
- Explain two theories or frameworks for understanding how Western Europe emerged out of 1,000 years of...
- Two cannons are mounted as shown in the drawing and rigged to fire simultaneously. They are...
- What is the potential of a cell made up of Zn|Zn2+ and Cu|Cu2+ half-cells at 25o...
ADVERTISEMENT