Pigeon Company owns 80% of the outstanding stock of Spiniflex Corporation, which was purchased on January 1,

Question:

Pigeon Company owns 80% of the outstanding stock of Spiniflex which was purchased on January 1, 2008, when Spiniflex's book values were equal to its fair values. The amount paid by Pigeon included $16,000 for goodwill.
On January 1, 2009, Pigeon purchased a truck for $40,000 which had no with a useful life of 8 years, depreciated on a straight-line basis. On January 1, 2014, Pigeon sold the truck to Spiniflex for $18,000. The truck was estimated to have a three-year remaining life on this date and no . All affiliates use the straight-line depreciation method.
Required:
Prepare all relevant entries with respect to the truck.
1. Record the journal entries on Pigeon's books for 2014.
2. Record the journal entries on Spiniflex's books for 2014.
3. Prepare the consolidation entries required for Pigeon and subsidiary for 2014 as a result of this transaction.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...