Assume that Parent Company decides to sell Equipment (Cost = $10,000, Accumulated Depreciation = $1,000) to Sub for $20,000 cash. Show the sale and the subsequent elimination entries by Parent Company
Parent Company Balance Sheet
Assets, Liabilities & Equities Book Value
Cash................................................$1,500,000
AR......................................................$10,000
Inventory.............................................$200,000
Land..................................................$640,000
Equipment...........................................$400,000
Accumulated Depreciation.......................-$150,000
Patent.........................................................$0
Total Assets.......................................$2,600,000
AP...................................................$100,000
Common Stock.....................................$450,000
Additional Paid In Capital.......................$600,000
Retained Earnings..............................$1,450,000
Total Liabilities & Equity..................$2,600,000
Sub Company Balance Sheet
Assets, Liabilities & Equities Book Value
Cash...................................................$35,000
AR....................................................$10,000
Inventory.............................................$65,000
Land..................................................$40,000
PP&E................................................$400,000
Accumulated Depreciation.....................-$150,000
Patent.......................................................$0
Total Assets....................................$400,000
AP..................................................$100,000
Common Stock...................................$100,000
Additional Paid In Capital.......................$50,000
Retained Earnings...............................$150,000
Total Liabilities & Equity...................$400,000