Sapling, Inc. is a 95%-owned subsidiary of Fir Enterprises. Fir Enterprises sells Sapling an industrial wood chipper

Question:

Sapling, Inc. is a 95%-owned subsidiary of Fir Enterprises. Fir Enterprises sells Sapling an industrial wood chipper for $10,000 on January 1, 20x8. Fir Enterprises paid $17,000 for the wood chipper and the asset currently has a book value of $8,000. The asset has a remaining useful life of 4 years, with no salvage value.

Provide Sapling’s entries reflecting the purchase of the wood chipper.

Provide Fir’s entries reflecting the sale of the wood chipper.

Provide the consolidating worksheet adjusting entries that must be made in 20x8.

Provide the consolidating worksheet adjusting entries for 20x9 that deal with the impact of annual depreciation that occurs on the purchasing subsidiary’s books.

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...