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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?

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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 2 years ago
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