The parent company owns 70% of the subs common stock. On January 1, 2021, parent company sold
Question:
The parent company owns 70% of the subs common stock. On January 1, 2021, parent company sold land to sub for $450,000. The land had originally cost Parent $356,000. On January 1, 2022, Sub purchased equipment from Parent for $26,400. The equipment originally cost $51,840 and had a January 1, 2022 book value of $29,160. The equipment’s remaining life was estimated to be 5 years.
On December 31, 2022, Parent purchased land and a building from sub. The land that had originally cost $216,000 was sold to parent for $150,000. The building cost $1,368,000 but had $792,000 in accumulated depreciation at the time it was sold to Parent for $648,000. The building is to be depreciated over the remaining life of 10 years. Straight-line depreciation with no salvage value is to be used for all depreciable assets.
Assume the following about Sub:
2021 Net Income $96,000
2022 Net Income $120,000
2023 Net Income $86,400
Book Value of subs net assets at 12/31/X1 $588,000
Book Value of subs net assets at 12/31/X2 $672,000
Book Value of subs net assets at 12/31/X3 $720,000
Reminder: you need to work on each one separately, there are four different transactions in this problem.
Required:
1. Prepare the consolidation work paper entries related to intercompany transactions that are required for 2021, 2022, and 2023. Prepare a separate entry for each intercompany transaction each year. Organize your answers by year. Show your work!
2. Determine the amount that should be debited to Income to NCI in entry #1 on the consolidation work paper for the years (2021 – 2023).
3. What amount should be credited to the NCI,in the first entry every year from 2021-2023, on the consolidation worksheet?
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas