Question

In: Accounting

Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on...

Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $120,000 but had a $73,000 book value on that date) to Placid Lake for $96,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2021, consolidation of these two companies to eliminate the impact of the intra-entity transfer?

Solutions

Expert Solution

Journal Entry
Sr. No. Date Account Titles & Explanation Debit ($) Credit ($)
1 Dec. 31, 2021 Retained Earning                                           Dr. 23,000
         To Equipment 23,000
(Being profit on intra-entity trasfer eliminated)
Dec. 31, 2021 Depreciation                                                  Dr. 19,200
       To Equipment 19,200
(Being Depreciation charged on equipment)
Working:-
Selling price of Equipment 96,000
Less:- Book Value of equipment 73,000
Profit on Sale of equipment 23,000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $410,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $4,000 per year. Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $310,000. Scenic reported net income of $120,000. Placid Lake declared $110,000 in dividends during this period;...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2014, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake’s 2015 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period;...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2014, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake’s 2015 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period;...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2014, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake’s 2015 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period;...
Placid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $490,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $7,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $390,000. Scenic reported net income of $200,000. Placid Lake declared $190,000 in dividends during this period;...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period;...
Placid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $490,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $7,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $390,000. Scenic reported net income of $200,000. Placid Lake declared $190,000 in dividends during this period;...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $450,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $8,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $350,000. Scenic reported net income of $160,000. Placid Lake declared $150,000 in dividends during this period;...
Which of the following statements is true regarding an intra-entity transfer of land? A loss is...
Which of the following statements is true regarding an intra-entity transfer of land? A loss is always recognized but a gain is deferred in a consolidated income statement. Recognition of a gain or loss is deferred by adjusting stockholders' equity through comprehensive income. loss and a gain are always recognized in a consolidated income statement. A loss and a gain are deferred until the land is sold to an outside party.
To find the gross profit percentage from intra-entity sales,
To find the gross profit percentage from intra-entity sales,A. divide the transfer price by the amount of the goods in the buyer's ending inventory.B. divide the transfer cost by the amount of the goods in the buyer's ending inventory.C. multiply the buyer's ending inventory by the amount of gross profit in the intra-entity sales.D. divide the transfer price by the cost of the goods.E. divide the transfer price by the gross profit on the intra-entity sales
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT