a. Prepare the required 10 consolidation entry in 2015. Description Du Gain Land Cash 50,000 Accounts receivable 04 b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018 Description Debit Creda gain Retained earnings 50,000✔ Land Land Dan Equity in c. Assume that the parent re-sells the land outside of the consolidated group for $525,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required 0 comodation entry for 2019. Description Credit Dobit 525,000 04 ✔ Cred 25,000 50,000 0✔ 50,000 500,000 25,000 x d. What will be the amount of gain reported in the consolidated income statement in 2019 $ 75,000

a. Prepare the required 10 consolidation entry in 2015. Description Du Gain Land Cash 50,000 Accounts receivable 04 b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018 Description Debit Creda gain Retained earnings 50,000✔ Land Land Dan Equity in c. Assume that the parent re-sells the land outside of the consolidated group for $525,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required 0 comodation entry for 2019. Description Credit Dobit 525,000 04 ✔ Cred 25,000 50,000 0✔ 50,000 500,000 25,000 x d. What will be the amount of gain reported in the consolidated income statement in 2019 $ 75,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

See similar textbooks

Similar questions

1-During 2020, Subsidiary sells land to Parent for $126,000. The land had a book value of $104,000. The land is then sold to a third party for $176,000 in 2024. Parent uses the equity method for the 100% investment. Required:a. Prepare the consolidation entry related to the land sale for 2020.b. Prepare the consolidation entry related to the land sale for 2021.c. Prepare the consolidation entry related to the land for 2024.d. What will be the gain on sale on the 2024 consolidated income statement?
Preparing the consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale). Subsidiary-depreciation $ 40,500 Parent-depreciations 27,600 b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016. $ 77,400 c. Prepare the required consolidation entry in 2016 (assume a full year of depreciation) Debit…
3-During 2020, Parent sells land to Subsidiary for $226,800. The land had a book value of $159,000. The land is then sold to an unaffiliated party for $303,000 in 2024. Required:a. Prepare the consolidation entry related to the land sale for 2020.b. Prepare the consolidation entry related to the land sale for 2021.c. Prepare the consolidation entry related to the land for 2024.d. What will be the gain on sale on the 2024 consolidated income statement?
Review of pre-consolidation equity method (controlling investment in affiliate, fair value differs from book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained earnings 400,000 345,000 300,000 Stockholders' equity 600,000 545,000 500,000 Total liabilities and equity $986,250 $897,500 $820,000 (For the years ended December 31) 2019 2018 2017 Revenues $970,000 $920,000 $850,000 Expenses 875,000 840,000 775,000 Net income $95,000 $80,000 $75,000 Dividends $40,000 $35,000 $25,000…
Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale). Subsidiary-depreciation $ 0 Parent depreciation $ 0 b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016. $ 0 c. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation). Description…
Assume the Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2017, Abernethy's land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018.
Preparing the consolidation journal entries for sale of depreciable assets-Equity method Assume that on January 1, 2011, a wholly owned subsidiary sells to its parent, for a sale price of $132,000, equipment that originally cost $156,000 The subsidiary originally purchased the equipment on January 1, 2007, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value. The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the full equity method to account for its Equity Investment a. Compute the annual depreciation expense for the subsidiary (pre-intercompany sale) and the parent (poss-intercompany sale) Annual depreciation expense-subsidiary $156,000 Annual depreciation expense-parent $ 122,000x b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2011. $ 62,400 x c. Prepare the required consolidation journal entry in 2011…
FC en gle om XY Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume on january 1, 2020, a wholly owned subsidiary sells to its parent, for a sale price of $88.000, equipment that originally cost $120,000. The subsidiary originally purchased the equipment on January 1, 2016, and depreciated the equipment assuming a 12-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). Annual depreciation expense-subsidiary 5 Annual depreciation expense-parent 5 b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2020. $0 x 0x 0x c. Prepare the required [ consolidation journal…
Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity methodAssume that on January 1, 2011, a wholly owned subsidiary sells to its parent, for a sale price of $126,000, equipment that originally cost $148,000. The subsidiary originally purchased the equipment on January 1, 2007, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the full equity method to account for its Equity Investment. a. Compute the annual depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). Annual depreciation expense-subsidiary Answer Annual depreciation expense-parent Answer b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2011. $Answer c. Prepare the required [I] consolidation journal…
Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments. Land Liabilities Cash Buildings and equipment Patents ÷ Description (b) Plastic…
Cost method consolidation entries (controlling investment in affiliate, fair value differs from book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $850,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained earnings 400,000 345,000 300,000 Stockholders' equity 600,000 545,000 500,000 Total liabilities and equity $986,250 $897,500 $820,000 (For the years ended December 31) 2019 2018 2017 Revenues $970,000 $920,000 $850,000 Expenses 875,000 840,000 775,000 Net income $95,000 $80,000 $75,000 Dividends $40,000 $35,000 $25,000 Assume on January 1, 2017, an investor company purchased 100%…
Review of pre-consolidation cost method (controlling investment in affiliate, fair value equals book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained earnings 400,000 345,000 300,000 Stockholders' equity 600,000 545,000 500,000 Total liabilities and equity $986,250 $897,500 $820,000 (For the years ended December 31) 2019 2018 2017 Revenues $970,000 $920,000 $850,000 Expenses 875,000 840,000 775,000 Net income $95,000 $80,000 $75,000 Dividends $40,000 $35,000 $25,000 Assume that…