1. Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common stock on January 1, 20X1. On January 1, 20X5, Frazer received $267,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $327,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis.
    Required:
    a. Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
    Record the entry to eliminate the gain on the truck and to correct the asset's basis and Record the entry to adjust Accumulated Depreciation.
    b. Prepare the worksheet consolidation entry or entries needed at December 31, 20X6, to remove the effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
    Record the entry to eliminate the gain on the truck and to correct the asset's basis and Record the entry to adjust Accumulated Depreciation.

Answer rating: 100% (QA)

a Gain on Sale of Truck 38143 Truck 60000 Depreciation Expense 92657 Accumulated Depreciation ... View the full answer