Polly Corporation acquired a 75% interest in Sally Corporation in 20X1 at a cost equal to book
Question:
Polly Corporation acquired a 75% interest in Sally Corporation in 20X1 at a cost equal to book value and fair value.
In 20X3 Sally sold land that cost $60,000 to Polly for $68,000. The land remained in Polly's possession until 20X5 when Polly sold it to an outside entity for $70,000. Needless to say, in 20X3, Polly posted a debit to land and a credit to cash for $68,000, and in 20X5, Polly posted a debit to cash for $70,000, a credit to land for $68,000, and a credit to gain on sale of land for $2,000. Polly uses the complete equity method to account for the investment in Sally.
The following figures were obtained from the financial statements of Polly and Sally:
Polly and Subsidiary Consolidated Financial Statements (selected amounts) and consolidated work paper journal entries | |||
Description | 20X3 | 20X4 | 20X5 |
Total Consolidated Land | |||
Total Consolidated Land Gain | |||
NCI Share of Consolidated Net Income | |||
Controlling Interest Share of Consolidated Net Income | |||
Consolidated Work paper Journal Entry related to land transaction (1 journal entry per year) |
Polly’s Separate Income includes all entries appropriate for the transactions described above. It does not include any accruals related to the entries Polly should record under the equity method.
Advanced Accounting
ISBN: 9780132568968
11th Edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith