On January 1, Year 1, Silver Oak Company, an 80% owned subsidiary of Clearwood, Inc. transferred...

 

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On January 1, Year 1, Silver Oak Company, an 80% owned subsidiary of Clearwood, Inc. transferred equipment with a 5-year remaining life to Clearwood in exchange for $84,000 cash. At the date of transfer, Silver Oak's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used with no salvage value. Silver Oak reported net income of $28,000 and $32,000 for Year 1 and Year 2, respectively. The annual excess amortization is $1,500. Requirements: (a) Prepare the consolidation entry "TA in Year 2. Account Title (b) Prepare the consolidation entry ED in Year 2. Account Title Debit Debit Answer: Year 1: Answer: Year 1: : Year 2: (d) Redo (c) but assume that the sale was downstream instead of upstream. (c) Compute the Clearwood's share in Silver Oak's net income for Year 1 and Year 2. Credit Year 2 Credit On January 1, Year 1, Silver Oak Company, an 80% owned subsidiary of Clearwood, Inc. transferred equipment with a 5-year remaining life to Clearwood in exchange for $84,000 cash. At the date of transfer, Silver Oak's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used with no salvage value. Silver Oak reported net income of $28,000 and $32,000 for Year 1 and Year 2, respectively. The annual excess amortization is $1,500. Requirements: (a) Prepare the consolidation entry "TA in Year 2. Account Title (b) Prepare the consolidation entry ED in Year 2. Account Title Debit Debit Answer: Year 1: Answer: Year 1: : Year 2: (d) Redo (c) but assume that the sale was downstream instead of upstream. (c) Compute the Clearwood's share in Silver Oak's net income for Year 1 and Year 2. Credit Year 2 Credit

Answer rating: 100% (QA)

a TA Transfer of assets The consolidation entry in Year ... View the full answer