Dudes Outfitters Ltd. is a 70%-owned subsidiary of Trail Ltd. On January 10, 20X2, Dudes sold some
Question:
Dudes Outfitters Ltd. is a 70%-owned subsidiary of Trail Ltd. On January 10, 20X2, Dudes sold some display cases to Trail Ltd. for $95,000, recognizing a gain of $48,000 before tax on the transaction. Trail Ltd. depreciated the cases on a straight-line basis over six years, taking a full year’s depreciation in 20X2.
On February 12, 20X5, Trail sold the display cases to an unaffiliated company for $55,000.
Required
Prepare the appropriate consolidated adjustments relating to the display cases for each year ended December 31, 20X2, through 20X5.
Step by Step Answer:
The various adjustments rounded to the nearest dollar are being provided in journal entry format below 20X2 Gain on sale of fixtures 45000 Fixtures 45...View the full answer
Advanced Financial Accounting
ISBN: 978-0132928939
7th edition
Authors: Thomas H. Beechy, V. Umashanker Trivedi, Kenneth E. MacAulay
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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