In preparing its consolidated financial statements at December 31, 20X7, the following consolidation entries were included in
Question:
In preparing its consolidated financial statements at December 31, 20X7, the following consolidation entries were included in the consolidation worksheet of Master Corporation:
Consolidation Worksheet Entries | Debit | Credit |
Buildings | 245,000 | |
Gain on Sale of Building | 49,000 | |
Accumulated Depreciation | 294,000 | |
Consolidation Worksheet Entries | Debit | Credit |
Accumulated Depreciation | 3,500 | |
Depreciation Expense | 3,500 |
Master owns 60 percent of Rakel Corporation’s voting common stock. On January 1, 20X7, Rakel sold Master a building it had purchased for $1,030,000 on January 1, 20X1, and depreciated on a 20-year straight-line basis. Master recorded depreciation for 20X7 using straight-line depreciation and the same useful life and residual value as Rakel.
Required:
a. What amount did Master pay Rakel for the building?
b.
What amount of accumulated depreciation did Rakel report at January 1, 20X7, prior to the sale?
c.
What annual depreciation expense did Rakel record prior to the sale?
d.
What expected residual value did Rakel use in computing its annual depreciation expense?
e.
What amount of depreciation expense did Master record in 20X7?
f.
If Rakel reported net income of $75,000 for 20X7, what amount of income will be assigned to the noncontrolling interest in the consolidated income statement for 20X7?
g.
If Rakel reported net income of $56,000 for 20X8, what amount of income will be assigned to the noncontrolling interest in the consolidated income statement for 20X8?
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker