Pam Corporation holds 70 percent ownership of Spray Enterprises. On December 31, 20X6, Spray paidPam $31,000 for a truck that Pam had purchased for $36,000 on January 1, 20X2. The truck wasconsidered to have a 10-year life from January 1, 20X2, and no residual value. Both companiesdepreciate equipment using the straight-line method.a. Prepare the worksheet consolidation entry or entries needed on December 31, 20X6, to removethe effects of the intercompany sale.Gain on Sale of truckTruckAccumulated depreciationDebitCreditb. Prepare the worksheet consolidation entry or entries needed on December 31, 20X7, to removethe effects of the intercompany sale.Investment in SprayTruckAccumulated depreciationDebitCreditDebitCreditDepreciation ExpenseAccumulated depreciation

Reference; Baydoun, N., Sulaiman, M., Willett, R. J., & Ibrahim, S. (2018). Principles of…

Answered: Pam Corporation holds 70 percent…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On 31/03/2022, Sea Ltd (the parent) sold equipment with a carrying amount of $290,000 to Bill Ltd for $275,000. The equipment initally had a useful life of ten years and was purchased for $600,000. The remaining useful life of the equipment is 7.25 years depreciated on a straight line basis. 1) Prepare the consolidation journal entries for this item at its transaction date.
Pitcher Corporation purchased 60 percent of Softball Corporation's voting common stock on January 1, 20X1. On January 1, 20X5. Pitcher received $240,000 from Softball for a truck Pitcher had purchased on January 1, 20x2, for $300,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis Required: a. Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field. view transaction list Consolidation Worksheet Entries < A Record the entry to eliminate the gain on the truck and to correct the asset's basis. B Note: Enter debits before credits Event 1 Record entry Accounts Clear entry Debit Credit view consolidation entries
On December 31, Year 4, Prone Inc. sold a piece of equipment to its 90 percent owned subsidiary, Supine Co. Details are as follows: Original purchase date January 1, Year 1 Original cost to Prone $65,000 Original estimate of salvage value $10,000 Original estimate of economic life 5 years $60,000 Intercompany selling price Both companies use straight-line depreciation. Both companies think that, as of the end of Year 4, the equipment's remaining useful life will be four years and the salvage value will become zero. In preparing its Year 5 consolidated financial statements, consolidated depreciation expense will be reduced by: $8,775 $7,800 O $7,020 O $9,750
Pitcher Corporation purchased 60 percent of Softball Corporation's voting common stock on January 1, 20X1. On January 1, 20X5, Pitcher received $297,000 from Softball for a truck Pitcher had purchased on January 1, 20X2, for $357,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis. Required: a. Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) b. Prepare the worksheet consolidation entry or entries needed at December 31, 20X6, to remove the effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Sea Ltd (the parent) sold an item of plant to Bill Ltd (the subsidiary) for $12,000 on 31/12/2021. The total carrying amount was $8,000 with a remaining useful life of 6 years. 1) Prepare the consolidation journal entries for this item at its transaction date.
On January 1, 2020, Parent Corporation purchased equipment from its 70% owned subsidiary for $360,000. The total useful life of the equipment was 15 years when Sub originally purchased it on January 1, 2015 for $450,000. Both Parent and Sub use straight- line depreciation. Required: a. Prepare the December 31, 2020 consolidation entry in general journal format. 5. Prepare the December 31, 2023 consolidation entry in general journal format. c. Repeat requirement (b), assuming instead that this had been a downstream sale.
On January 1, 20X1, Amber Products Corporation sold land costing $200,000 to its subsidiary, Jerry Interiors Corporation, for $240,000. Jerry still held the land at the end of 20X2. Jerry sold the land to a nonaffiliate on March 31, 20X3, for $255,000. Prepare the consolidation entry related to the land at the end of 20X2. Debit Land for $40,000; Credit Gain on Sale of Land for $40,000 Debit Investment in Jerry for $40,000; Credit Land for $40,000 Debit Gain on Sale of Land for $40,000; Credit Land for $40,000 bit Land for $40,000; Credit Investment in Jerry for $40,000.
stan Itd sold inventories during the current period to its wholly owned susidiary. marcia Itd for $45000. These items previously cost stan Itd $37500. Marcia Itd subsequently sold half the items to an external entity for $27500. The remainder of the inventory was sold outside the group the following year. The tax Rate is 30%. required prepare the consolidation journal entries for the current and following year
On January 1, year 1, P Company sold a machine for P900,000 to S Company, its wholly owned subsidiary. P paid P1,100,000 for this machine, which had accumulated depreciation of P250,000. P estimated a P100,000 salvage value and depreciated the machine on the straight-line method over twenty years, a policy which S continued. In P's December 31, year 1 consolidated balance sheet, this machine should be included in cost and accumulated depreciation as
On January 1, Year 1, East Company purchased West Company. East Company paid $670,000 cash and assumed all of West Company's liabilities. West's books showed tangible assets of $578,000, liabilities of $54,000, and equity of $632,000. An appraiser assessed the fair market value of the tangible assets at $622,000 at the date of acquisition. On December 31, Year 4 East determines that the goodwill suffered a $32,000 permanent impairment. However, on December 31, Year 6 East estimated that it had recovered $12,000 of the impairment that had previously been considered to be permanent impairment. Based on this information, the book value of the goodwill shown on the December 31, Year 6 balance sheet is: Multiple Choice O O O $102,000. $134,000. $54,000. $70,000.
On January 1, 2021, ABC Company sold machinery to MNO, its wholly-owned subsidiary for P450,000. The Equipment had cost ABC P560,000. The book value at the time of sale was P230,000. ABC used a 5-year life, with a salvage value o P10,000 and uses sum of the years digits depreciation. MNO will adopt this practice. On the consolidated statement of financial position at December 31, 2021, the deprecation expense should be stated at: Your answer
On January 1, 2021, ABC Company sold machinery to MNO, its wholly-owned subsidiary for P450,000. The Equipment had cost ABC P560,000. The book value at the time of sale was P230,000. ABC used a 5-year life, with a salvage value o P10,000 and uses sum of the years digits depreciation. MNO will adopt this practice. On the consolidated statement of financial position at December 31, 2021, the deprecation expense should be stated at:

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