31 and are shown in the table given below. The following items were overlooked when the statements were prepared:• The Year 5 gain on sale of assets resulted from the subsidiary selling equipment to the parent on September 30. The parentimmediately leased the equipment back to the subsidiary at an annual rental of $13,200. This was the only intercompany renttransaction that occurred each year. The equipment had a remaining life of five years on the date of the intercompany sale.The Year 6 gain on sale of assets resulted from the January 1 sale of a building, with a remaining life of seven years, by thesubsidiary to the parent.• Both gains were taxed at a rate of 40%.CONSOLIDATED INCOME STATEMENTSYear 5$ 755,0008,8003,300Miscellaneous revenuesGain on sale of assetsRental revenueMiscellaneous expensesRental expenseDepreciation expenseIncome tax expenseNon-controlling interestNet incomeNCIRequired:Prepare correct consolidated income statements for Years 5 and 6. (Input all values as positive numbers. Leave no cells blank - becertain to enter zero wherever required. Omit $ sign in your response.)Miscellaneous revenuesMiscellaneous expenseRent expenseDepreciation expenseIncome tax expenseConsolidated net incomeAttributable to:Shareholders of Parent767,100885,900400,600492,54053,40064,60076,00081,40081,50095,00033,0005,280644,500738,820$ 122,600 $ 147,080Parent CompanyCorrected Consolidated Income StatementsYears 5 and 6Year 6$ 830,00042,70013,200Year 5$ 755,000400,6005010075560$$es$Year 6$ 830,000492,54051400$$es$

Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

• The Year 5 gain on sale of assets resulted from the subsidiary selling equipment to the parent on September 30. The parent immediately leased the equipment back to the subsidiary at an annual rental of $13,200. This was the only intercompany rent transaction that occurred each year. The equipment had a remaining life of five years on the date of the intercompany sale. • The Year 6 gain on sale of assets resulted from the January 1 sale of a building, with a remaining life of seven years, by the subsidiary to the parent. • Both gains were taxed at a rate of 40%.

• The Year 5 gain on sale of assets resulted from the subsidiary selling equipment to the parent on September 30. The parent immediately leased the equipment back to the subsidiary at an annual rental of $13,200. This was the only intercompany rent transaction that occurred each year. The equipment had a remaining life of five years on the date of the intercompany sale. • The Year 6 gain on sale of assets resulted from the January 1 sale of a building, with a remaining life of seven years, by the subsidiary to the parent. • Both gains were taxed at a rate of 40%.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8RE

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