Question
In: Accounting
Pearson Company owns 90% of the outstanding common stock of Spring Company. On January 1, 2014,...
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Solutions
Expert Solution
| Cost of equipment | $316,700 |
| Accumulated Depreciation ($316,700 × .10 × 5 years) | $158,350 |
| Book value 1/1 2014 | $158,350 |
| Proceeds from sale | $206,850 |
| Gain on sale | $48,500 |
Part A.
| 2014 | |||
| (1) | |||
| Equipment ($316,700 - $206,850) | $109,850 | ||
| Gain on Sale of Equipment | $48,500 | ||
| Accumulated Depreciation($316,700)(5/10) | $158,350 | ||
| (2) | Accumulated Depreciation – Equipment | $9,700 | |
| Depreciation Expense ($48,500/5) | $9,700 | ||
| 2012 | |||
| (1) | Equipment | $109,850 | |
| Beginning Retained Earnings – Pearson (.9 × $48,500) | $43,650 | ||
| Noncontrolling Interest (.1 × $48,500) | $4,850 | ||
| Accumulated Depreciation – Equipment | $158,350 | ||
| (2) | Accumulated Depreciation – Equipment | $19,400 | |
| Depreciation Expense | $9,700 | ||
| Beginning Retained Earnings – Pearson (.9 × $9,700) | $8,730 | ||
| Noncontrolling Interest (.10 × $9,700) | $970 |
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