On January 1, 2020, P Company purchased equipment from its 80% owned subsidiary for $600,000. The carrying
Question:
On January 1, 2020, P Company purchased equipment from its 80% owned subsidiary for $600,000. The carrying value of the equipment on the books of S Company was $450,000. The equipment had a remaining useful life of six years on January 1, 2020. On January 1, 2021, P Company sold the equipment to an outside party for $550,000.
Required:
A. Prepare in general journal form the entries necessary in 2020 and 2021 on the books of P Company to account for the purchase and sale of the equipment.
B. Determine the consolidated gain or loss on the sale of the equipment and prepare in general journal form the entry necessary on the December 31, 2021, consolidated statements workpaper to properly reflect this gain or loss.
Step by Step Answer:
Intercompany sale of equipment Accumulated Remaining Cost Depreciation Carrying Value Life Depreciat...View the full answer
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A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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