Assume that on January 1, 2019, a parent sells to its wholly owned subsidiary, for a sale
Question:
Assume that on January 1, 2019, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally purchased the equipment on January 1, 2015, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity Investment.
Prepare the required [I] consolidation entry in 2019 (assume a full year of depreciation).
Description | Debit | Credit | |
---|---|---|---|
[lgain] | Equipment | Answer
| Answer
|
Gain on Sale
| Answer
| Answer
| |
Accumulated Depreciation
| Answer
| Answer
| |
[ldep] | Accumulated Depreciation
| Answer
| Answer
|
Depreciation Expense
| Answer
| Answer
|
Prepare the required [l] consolidation entry in 2022 (assuming the subsidiary is still holding the equipment).
Description | Debit | Credit | |
---|---|---|---|
[lgain] | Equipment | Answer
| Answer
|
Gain on Sale
| Answer
| Answer
| |
Accumulated Depreciation
| Answer
| Answer
| |
[ldep] | Accumulated Depreciation
| Answer
| Answer
|
Depreciation Expense
| Answer
| Answer
|
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith