On January 1, 20X4, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20X6, Gold sold the computer to TLK Corporation and recorded the fa Consolidation Worksheet Entries Cash Accumulated Depreciation Computer Equipment Gain on Sale of Equipment Debit Credit 39,000 16,000 40,000 15,000 TLK Corporation holds 60 percent of Gold's voting shares. Gold reported net income of $ 45,000 including the gain on the sale of equipment, and TLK reported income from its own operatio life of the equipment as a result of the intercompany transfer In the preparation of the 20X6 consolidated balance sheet, computer equipment will be Multiple Choice
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- On January 1, 20x4, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x6, Gold sold the computer to TLK Corporation and recorded the following entry Consolidation Worksheet Entries Cash Accumulated Depreciation Computer Equipment Gain on Sale of Equipment Debit Credit 39,000 16,000 40,000 15,000 TLK Corporation holds 60 percent of Gold's voting shares. Gold reported net income of $ 45,000 including the gain on the sale of equipment, and TLK reported income from its own operations of $ 85,000 for 20x6. There is no change in the estimated economic life of the equipment as a result of the intercompany transfer Consolidated net income for 20X6 will be Multiple Choice O O $130,000 $120,000 $112,000. $106,000On January 1, 20X5, Spring Company purchased a machine with an expected economic life of ten years. On January 1, 20X8, Spring sold the machine to Peterson Corporation and recorded the following entry: Cash Accumulated Depreciation Machine Gain on Sale of Equipment O $40,000. Account O $28,000. O $32,000. O $140,000. Debit 350,000 120,000 Peterson Corporation holds 80 percent of Spring's voting shares. Spring reported net income of $200,000, and Peterson reported income from its own operations of $380,000 for 20X8. There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer. Based on the preceding information, income assigned to the noncontrolling interest in the 20X8 consolidated income statement will be: Credit 400,000 70,000Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2018, the companies had the following account balances: Akron ToledoSales . . . . . . .. $1,100,000 $600,000Cost of goods sold 500,000 400,000Operating expenses 400,000 220,000Investment income . . Not given –0–Dividends declared . . .80,000 30,000 Intra-entity sales of $320,000 occurred during 2017 and again in 2018. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2017, with $50,000 unsold on December 31, 2018.a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?b. Prepare a consolidated income statement for the year ending December 31, 2018.
- On January 1, 2017, Server Company purchased a machine with an expected economic life of five years. On January 1, 2019, Server sold the machine to Patron Corporation and recorded the following entry: Cash 45,000 Accumulated Depreciation 28,000, Machine 70,000, Gain on Sale of Equipment 3,000. Patron Corporation holds 75 percent of server's voring shares.Server reported a net income of $50,000, and Patron reported income from its own operations of 100,000 for 2019/. There is no change in the economic life of the equipement as a result of the intercorporate tranfer. Based on the preceding information, in the preparation of the 2019 consolidated balance sheet, the machine will be : Debited for 25,000, Credited for 45,000, debited for 1,000, debited for 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 $300,000. Split had purchased the building on January 1, 20X1, at a cost of $400,000 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. Record the entry to eliminate the gain on the equipment and to correct the asset's basis. Record the entry to adjust Accumulated Depreciation.Pea Company purchased 70 percent of Split Company's stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $300,000. Split had purchased the building on January 1, 20X1, at a cost of $400,000 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. Required: a. What amount of depreciation expense on the building will Pea report for 20X9? Answer is complete but not entirely correct. Annual depreciation expense reported by Pea S 33,333 d. 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? Income assigned to noncontrolling interest e. Split reports assets with a book value of $ 350,000 and liabilities of $ 150,000 at January 1, 20X9, and reports net income of $ 40,000 and dividends of $ 15,000 for 20X9. What amount will be assigned…
- Wayne Company purchased 100% of Schuster Company on January 1, 20X1 for $800,000 when the book value of Schuster was $750,000 with the excess caused by a patent that was undervalued by $50,000. The patent had a five year life. In 20x2 Wayne sold inventory to Schuster still in the inventory of Schuster at year end with a profit of $3,000. During 20x3, Wayne sold inventory to Schuster at a cost of $20,000 for $30,000. At December 31, 20x3, Schuster still had $6,000 cost to Schuster of that inventory on hand in its inventory. The income statements and balance sheets for the two companies for 20X3 are shown below: Complete the consolidated worksheet. Wayne Schuster Dr. Cr Consolidated Sales 300,000 100,000 Cost of Goods Sold 60,000 40,000 240,000 60,000 Expenses…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 $9,750On January 1, 20X2, Sansa Company purchases two (2) separate sets of assets and activities from third-parties, as follows:i. A manufacturing plant of Arya Company. The set of assets acquired and liabilities assumed are as follows:Plant premise P100,000,000Machinery 60,000,000Equipment 30,000,000A mortgage loan secured on the plant premise 120,0000Sansa will continue to employ the existing employees of the manufacturing plant and will pay them the same salaries as before. The above manufacturing plant is a cash-generating unit that generates outputs that are sold to outside customers. Sansa pays a cash consideration of P100 million to Arya Company.ii. A set of assets and liabilities of Bron Company.Plant premise P100,000,000Machinery 60,000,000Equipment 30,000,000A mortgage loan secured on the plant premise 120,0000The vendor will retrench the existing employees of the factory and pay their termination benefits. The set of assets is not capable of generating independent cash flows.…
- On January 1, 20X1, Promo, Inc. purchased 70% of Set Corporation for $469,000. On that date the book value of the net assets of Set totaled $500,000. Based on the appraisal done at the time of the purchase, all assets and liabilities had book values equal to their fair values except as follows: Book Value Fair Value Inventory $100,000 $120,000 Land 75,000 85,000 Equipment (useful life 4 years) 125,000 165,000 The remaining excess of cost over book value was allocated to a patent with a 10-year useful life. During 20X1 Promo reported net income of $200,000 and Set had net income of $100,000. What income from subsidiary did Promo include in its net income if Promo uses the simple equity method? a. $33,000 b. $42,000 c. $70,000 d. $100,000Pea Company purchased 70 percent of Split Company's stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $372,000. Split had purchased the building on January 1, 20X1, at a cost of $472,000 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. Required a. What amount of depreciation expense on the building will Pea report for 20X9? Annual depreciation expense reported by Pea Annual depreciation expense reported by Split b. What amount of depreciation expense would Split have reported for 20X9 if it had continued to own the building? No A Pea Company purchased 70 percent of Split Company's stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $372,000. Split had purchased the building on January 1, 20X1, at a cost of $472,000 and used straight-line depreciation on an expected life of 20 years. The…Cake Company acquired the following plant assets during the current year.· Equipment - Acquired at an invoice price of P600,000, subject to a 5% cash discount which was not taken.· Land - Acquired by issuing 10,000 shares of P50 par value when the market price of the share was P120. The shares issued are treasury shares which had been acquired at a cost of P90 per share. The fair value of the land is P1,100,000.· Machinery - Acquired at a cost of P275,000. Installation cost was P7,000, trial run and other testing cost P18,000, and construction of base, P10,000.What is the total increase in property, plant and equipment as a result of plant asset acquisitions? P1,770,000 P1,970,000 P1,980,000 P2,080,000