Lindsay is 80% owned by Danielle. Danielle purchased a machine for $8,000 on January 1,2013. The machine
Question:
Lindsay is 80% owned by Danielle. Danielle purchased a machine for $8,000 on January 1,2013. The machine is being depreciated using the straight-line method over a period of 8years with no salvage value. The machine is sold to Lindsay on December 31, 2015 for$10,000. Danielle records its 2015 depreciation expense prior to the sale. The accumulated depreciation of Danielle at the time of the sale is $3,000 (1000 x 3). The remaining use full life of the machine is five years. Lindsay had reported net income of $150,000 and paid dividends of $30,000 in 2015. Lindsay reported net income of $130,000 and paid dividends of $40,000 in 2016. Danielle purchased Lindsay at book value so there is no purchase differential.
Show the entries for the intercompany sale of the machine:
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso