On January 1, 20X7, Wainwrite Corporation sold to Lance Corporation equipment it had purchased for $150,000 and used for eight years. Wainwrite recorded a gain of $14,000 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Wainwrite holds 70 percent of Lance's voting common shares.

a. Give the journal entry made by Wainwrite on January 1, 20X7, to record the sale of equipment.
b. Give the journal entries recorded by Lance during 20X7 to record the purchase of equipment and year-end depreciation expense.
c. Give the elimination entry or entries related to the intercompany sale of equipment needed at December 31, 20X7, to prepare a full set of consolidated financial statements.
d. Give the elimination entry or entries related to the equipment required at January 1, 20X8, to prepare a consolidated balance sheet only.

  • CreatedMay 23, 2014
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