Consolidation Entries: Intercompany Operating Lease Prin Inc. owns 100% of Strin Inc.s com mon stock. On 1/1/06,
Question:
Consolidation Entries: Intercompany Operating Lease Prin Inc. owns 100% of Strin Inc.’s com¬
mon stock. On 1/1/06, Strin leased manufacturing equipment from Prin under an operating lease requiring payments of $3,000 per month. Cash payments of $30,000 were made in 2006. All as¬
pects of the intercompany transactions were properly recorded by each company in its separate books. (Prin bought the equipment for $110,000 on 1/1/06 and is using straight-line depreciation and a 5-year life.)
1. Determine the amounts that should be reported in each company’s separate 2006 income state¬ ment and 12/31/06 balance sheet (asset and liability sections only).
2. Prepare the consolidation entries as of 12/31/06, relating only to these accounts. Use the follow¬
ing format in working both requirements:
Consolidation Entries Account Prin Inc. Strin Inc. Dr. Cr. Consolidated
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