On January 1, 2012, Jungle Company sold a machine to Safari Company for $30,000. The machine had an original cost of $24,000 and accumulated depreciation on the asset was $ 9000 at the time of the sale. The machine has a 5 year remaining life and will be depreciated on a straight line basis with no salvage value. Safari Company is an 80% owned subsidiary of Jungle Company. Required: 1-Explain the adjustments that would have to be made to arrive at consolidated net income for the years 2012 through 2016 as a result of this sale. 2-prepare the elimination that would be required on the Dec 31, 2012 consolidated worksheet as a result of this sale. 3-prepare the entry for Dec 31, 2013, worksheet as a result of this sale.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  • On January 1, 2012, Jungle Company sold a machine to Safari Company for $30,000. The machine had an original cost of $24,000 and accumulated depreciation on the asset was $ 9000 at the time of the sale. The machine has a 5 year remaining life and will be depreciated on a straight line basis with no salvage value. Safari Company is an 80% owned subsidiary of Jungle Company.

Required:

1-Explain the adjustments that would have to be made to arrive at consolidated net income for the years 2012 through 2016 as a result of this sale.

2-prepare the elimination that would be required on the Dec 31, 2012 consolidated worksheet as a result of this sale.

3-prepare the entry for Dec 31, 2013, worksheet as a result of this sale.

 

 

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