Fabulous Fashions Corporation owns 70 percent of Shiny Clothing Corporation's common stock. On January 1, 20X1, Fabulous purchased equipment for $50,000. Fabulous depreciates the equipment using the straight-line method over a 10-year period assuming no salvage value. On December 31, 20X1, Fabulous sold the equipment to Shiny for $48,000. On July 1, 20X3, Shiny sold the equipment to a nonaffiliate for $44,000. Calculate the unrealized gain that Fabulous would defer at the end of 20X1 using the fully adjusted equity method. O $2,000 O $3,000 O $4,000 $5,000
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- Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2016, Thomson acquired a building with a 10-year life for $460,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2018, Thomson sold this building to Stayer for $430,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2018, how does this transfer affect the computation of consolidated net income?a. Net income is reduced by $62,400.b. Net income is reduced by $59,440.c. Net income is reduced by $70,200.d. Net income is reduced by $54,600.Howard Corp. owned 80% of the outstanding common stock of Zest Inc. On January 1, 20X1, Howard acquired a building with a ten-year life for $500,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 20X3, Howard sold this building to Zest for $448,000. At that time, the building had a remaining life of eight years but still no expected salvage value. Which of the following is the consolidation entry to adjust depreciation expense and accumulated depreciation for the excess depreciation? O Debit Accumulated Depreciation at $4,800 and credit Depreciation Expense at $4,800 O Debit Depreciation Expense at $6,000 and credit Accumulated Depreciation at $6,000 O Debit Accumulated Depreciation at $6,000 and credit Depreciation Expense at $6,000 O Debit Depreciation Expense at $4,800 and credit Accumulated Depreciation at $4,800Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a used piece of equipment to Stop in exchange for $236,000 cash. Pit's original cost of the equipment was $728,000 and accumulated depreciaiton of 01/01/21 was $447,000. The remaining useful life of the equipment is 10 years, and Stop will use that same usefull life. Both companies use the straight line method of depreciation. The Year-End Consolidated Financial Statements would include: Consolidated Loss on Sale in the amount of: $______________ Consolidated Depreciation Expense in the amount of $____________ Consolidated Equipment in the amount of $_______________ Consolidated Accumulated Depreciation in the amount of $__________
- Victor Co. owned 80% of the voting common stock of Wilson Co. On January 3, 20X2, Victor sold equipment to Wilson for $161,000. The equipment cost Victor $200,000. At the time of the transfer, the balance in accumulated depreciation was $60,000. Victor estimated a zero salvage value and depreciated the equipment using the straight-line method over 10 years, a policy that Wilson continued. In Victor's December 31, 20X2 consolidated balance sheet, this equipment should be included in fixed-asset cost and accumulated depreciation as O Cost: $200,000; Accumulated Depreciation: $83,000 O Cost: $200,000; Accumulated Depreciation: $80,000 O Cost: $161,000; Accumulated Depreciation: $23,000 O Cost: $140,000; Accumulated Depreciation: $20,000Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2022, Thomson acquired a building with a 10-year life for $344,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2024, Thomson sold this building to Stayer for $330,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2024, how does this transfer affect the computation of consolidated net income? Multiple Choice Net income is reduced by $62,100. Net income is reduced by $53,840. Net income is reduced by $48,300. Net income is reduced by $55,200.WW Corporation owns 70 percent of the outstanding stock of HH, Incorporated. On January I, 20x4, WW acquired a building with a 10-year life for P300,000. WW anticipated no salvage value, and the building was to be depreciated on the straight-line basis. On January 1, 20x5 WW sold this building to HH for P280,000. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 20x5 How does this transfer affect the computation of consolidated net income? __________ (amount, then increase or decrease)
- Parrot Company owns all the outstanding voting stock of Southern Manufacturing. On January 1, 2014, Parrot sold machinery to Southern at its book value of $24,000. Parrot had the machinery three years before selling it and used an eight-year straight-line depreciation method, with zero salvage value. Southern will use the straight-line depreciation method, and assumes the machine has five years remaining and no salvage value. In the 2014 consolidating working papers, the depreciation expense A. Decreased by $4,800. B. Increased by $4,800. C. Increased by $8,000. D. Required no adjustment.Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On December 31, 20X8, Mortar received $370,000 from Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000 and had been depreciating it over 10 Years and no salvage value. After the sale, the equipment is expected to have a 5-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis. Based on the preceding information, in the preparation of elimination entries related to the equipment transfer for the 20X8 consolidated financial statements, the credited adjustment to Accumulated Depreciation would be: Group of answer choices $128,000 $120,000 $200,000 $160,000 * With complete calculationPeregrine Corporation acquired an 80% interest in Serine Corporation in 2011 at a time when Serine's book values and fair values were equal to one another. On January 1, 2014, Serine sold a truck with a $55,000 book value to Peregrine for $100,000. Peregrine is depreciating the truck over 10 years using the straight-line method. The truck has no salvage value. Separate incomes for Peregrine and Serine for 2014 were as follows: Peregrine Serine Sales $1,800,000 $1,050,000 Gain on sale of truck 45,000 Cost of Goods Sold (750,000) (285,000) Depreciation expense (450,000) (135,000) Other expenses…
- Pluto Corporation owns 70 percent of Saturn Company's stock. On July 1, 20X4, Pluto sold a piece of equipment to Saturn for $56,350. Pluto had purchased this equipment on January 1, 20X1, for $63,000. The equipment's original 15-year estimated total economic life remains unchanged. Both companies use straight-line depreciation. The equipment's residual value is considered negligible. Based on the information provided, in the preparation of the 20X4 consolidated financial statements, equipment will be ____ in the consolidation entries. Multiple Choice A. debited for $56,350 B. debited for $6,650 C. credited for $63,000 D. debited for $63,000Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On December 31, 20X8, Mortar received $370,000 from Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000 and had been depreciating it over 10 Years and no salvage value. After the sale, the equipment is expected to have a 5-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis. Based on the preceding information, how much of the gain on sale of the equipment recorded by Mortar for 20X8 will be recognized in 20X9? Group of answer choices $26,000 $0 $13,000 $15,000Pea Company purchased 70 percent of Split Company’s stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $360,000. Split had purchased the building on January 1, 20X1, at a cost of $460,000 and used straight-line depreciation on an expected life of 20 years. The asset’s total estimated economic life is unchanged as a result of the intercompany sale.a) What amount of income will be assigned to the noncontrolling interest in the consolidated income statement for 20X9 if Split reports net income of $40,000 for 20X9?b)Split reports assets with a book value of $310,000 and liabilities of $130,000 at January 1, 20X9, and reports net income of $40,000 and dividends of $17,000 for 20X9. What amount will be assigned to the noncontrolling interest in the consolidated balance sheet at December 31, 20X9, assuming the fair value of the noncontrolling interest at the date of acquisition was equal to 30 percent of Split Company’s book value?