Wildhorse Corp. owns 75% of Novak Inc. Both companies are in the mining industry. During 2017, Wildhorse
Question:
Wildhorse Corp. owns 75% of Novak Inc. Both companies are in the mining industry. During 2017, Wildhorse Corp. purchased a building from Novak Inc. for $1,360. The building’s original cost is $25,000 and its carrying amount in Novak Inc.’s financial statements is $800. Wildhorse’s Contributed Surplus account contains a credit balance of $350 from previous related-party transactions. Novak’s Contributed Surplus account is nil. There is no available independent evidence of the value of the building because it is a unique building in a remote part of the country. Wildhorse subsequently sold the building, during 2018, to an unrelated party for $2,080. Both Wildhorse and Swifty follow ASPE.
Using the related-party decision tree answer the following.
How would both Wildhorse and Swifty record the purchase and sale of the building during 2020? (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Wildhorse Corp.:
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
Swifty Inc.:
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
eTextbook and Media
List of Accounts
Record the subsequent sale of the building by Wildhorse during 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
eTextbook and Media
List of Accounts
Assume that the transaction is in the normal course of operations for both Wildhorse and Swifty and that it has commercial substance. Record the journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Wildhorse Corp.:
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
Swifty Inc.:
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
Wildhorse Corp.
Account Titles and Explanation | Debit | Credit |
---|---|---|
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
enter an account title | enter a debit amount | enter a credit amount |
List of Accounts
Calculate the total impact on income of the purchase and sale of the building for 2017 and 2018 for the consolidated reporting unit of the two companies. What can you conclude from your calculation?
Total income for 2017 and 2018 will select an option decrease increase by $enter a dollar amount |
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield