1.
Introduction: Intra group transactions- those transaction which occurs between companies within a group are known as intra group transactions. These do not form as a part of the consolidated statements as the parent company and other companies’ net profit is not inappropriately increased.
To prepare: Journal entries for gain on sale of land and gain on investment in R corporation.
2.
Introduction: Intra group transactions- those transaction which occurs between companies within a group are known as intra group transactions. These do not form as a part of the consolidated statements as the parent company and other companies’ net profit is not inappropriately increased.
To prepare: Journal entries for worksheet elimination.
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Advanced Financial Accounting
- Par Inc. owns 70% of Sent Inc's voting shares. Sent purchased land for 560,000 and then sold it to Par on June 10, 2019, for $90,000. Which of the following statements are TRUE regarding the worksheet cosolidation entries needed on December 31. 2019 and 2020 to remove the effects of the Intercompany sale of land? OThe December 31. 2019, worksheet consolidation entry includes a debit to Gain on Sale of Land of $30,000. The December 31, 2019. worksheet consolidation entry includes a credit Land of $30,000. The December 31, 2020, worksheet consolidation entry includes a debit to Investment in Sent of $21.000. The December 31, 2020, worksheet consolidation entry includes a debit to Land of $9.000. OThe December 31, 2020, worksheet consolidation entry includes a credit to Gain on Sale of Land of $30,000.arrow_forwardUpper Company holds 60 percent of Lower Company’s voting During the preparation of consolidated financial statements for 20x4, the following eliminating entry was made: Retained earnings, January 1 10,000 Land 10,000 Which of the following statements is correct? A. Upper Company purchased land from Lower Company during B. Upper Company purchase land from Lower Company before January 1, C. Lower Company purchased land from Upper Company during D. Lower Company purchased land from Upper Company before January 1, 20x4.arrow_forwardP Company owns 90% of the outstanding common stock of S Company. On January 1, 2020, S Company sold land to P Company for $600,000. S Company originally purchased the land for $400,000. On January 1, 2021, P Company sold the land purchased from S Company to a company outside the affiliated group for $700,000. Required: Prepare in general journal form the workpaper entries necessary because of the intercompany sale of land in the consolidated financial statements workpaper for the year ended December 31, 2021.arrow_forward
- N3. Preparing the [I] consolidation entries for sale of land Assume that during 2015 a wholly owned subsidiary sells land that originally cost $540,000 to its parent for a sale price of $600,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping.arrow_forwardAssume 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.arrow_forwardStiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2020, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2020 and 2021, respectively. Leo uses the equity method to account for its investment. On a consolidation worksheet, what adjustment would be made for 2020 regarding the land transfer?arrow_forward
- Intra-group transaction Question (worksheet adjustment entries for the following independent transactions) Sydney Ltd owns all of the shares of Mel Ltd. In relation to the following intragroup transactions, all parts of which are independent unless specified, prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2019. Assume an income tax rate of 30%. (e) SYD Ltd sold a warehouse to MEL Ltd for $150 000. This had originally cost SYD Ltd $123 000. The transaction took place on 1 January 2018. MEL Ltd charges depreciation at 5% p.a. on a straight-line basis.arrow_forwardPeopleMag sells a plot of land for $100,000 to Seven Star Company, its 100 percent owned subsidiary, on January 1, 20X7. The cost of the land was $75,000, when it was purchased in 20X6. In 20X9, Seven Star sells the land to Hot Properties Incorporated an unrelated entity, for $120,000. How is the land reported in the consolidated financial statements for 20X7, 20X8 and 20X9?arrow_forwardPlumber Corporation owns 60 percent of Socket Corporation’s voting common stock. On December 31, 20X4, Plumber paid Socket $234,000 for dump trucks Socket had purchased on January 1, 20X2. Both companies use straight-line depreciation. The consolidation entry included in preparing consolidated financial statements at December 31, 20X4, was Consolidation Worksheet Entry Debit Credit Trucks 21,000 Gain on Sale of Trucks 30,000 Accumulated Depreciation 51,000 a)What amount did Socket pay to purchase the trucks on January 1, 20X2? b)What was the economic life of the trucks on January 1, 20X2? c)Prepare the worksheet consolidation entry needed in preparing the consolidated financial statements at December 31, 20X5. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to whole dollar.arrow_forward
- On January 1, 2010 Hand acquires 100% of Finger in a statutory merger. At acquisition date the following were the book values and fair values of fixed assets of these two companies: Book Value. Fair Value Hand 900,000 800,000 Finger 200,000 300,000 a. What is consolidated fixed assets under the acquisition method b. What is consolidated fixed assets under the purchase method c.What is consolidated fixed assets under the pooling of interests method thank youarrow_forwardUpper Company holds 60 percent of Lower Company’s voting shares. During the preparation of consolidated financial statements for 20x4, the following eliminating entry was made: Retained earnings, January 1 10,000 Land 10,000 Which of the following statements is correct? A. Upper Company purchased land from Lower Company during 20x4. B. Upper Company purchase land from Lower Company before January 1, 20x4. C. Lower Company purchased land from Upper Company during 20x4. D. Lower Company purchased land from Upper Company before January 1, 20x4.arrow_forwardMerger In 2018, PepsiCo, Inc. acquired SodaStream, a sparkling water maker, for $6,686 million in cash. At the acquisition date, SodaStream's identifiable net assets had fair values as follows (in millions): Inventories Property, plant and equipment Intangible assets Other net assets Required Prepare the journal entry necessary to record this acquisition on PepsiCo's books, assuming it is reported as a merger. Note: Provide all answers in millions. Property, plant and equipment Intangible assets Goodwill $352 386 4,248 (186) Previous V V V V Inventories Other net assets To record acquisition of SodaStream. V Debit 352 386 4,248 1,886 0 0 Credit E 0x 0 0✓ 0✓ 6,686 X 186 ✔ R 5 T MacBook Air 7 8 Nextarrow_forward