1. In 202, Skate developed a patent for a high-speed drill bit that Pond planned to market extensively. In accordance with generally accepted accounting standards, Skate charges all research and development costs to expense In the year the expenses are Incurred. At January 1, 205, the market value of the patent rights was estimated to be $50,000. Pond believes the patent will be of value for the next 20 years. The remainder of the differential is assigned to buildings and equipment, which also had a 20 -year estimated economic life at January 1, 20X5. All of Skate's other assets and Iiabilities Identified by Pond at the date of acquisition had book values and fair values that were relatively equal. 2. On December 31,207, Pond sold a building to Skate for $65,000 that it had purchased for $125,000 and depreciated on a straight-Iine basis over 25 years. At the time of sale, Pond reported accumulated depreciation of $75,000 and a remaining Ife of 10 years. 3. On July 1, 20x6, Skate sold land that it had purchased for $22,000 to Pond for $35,000. Pond Is planning to build a new warehouse on the property prior to the end of 209. 4. Both Pond and Skate paid dividends in 208. Required: a. Prepare all consolidation entries required to prepare a three-part consolidation working paper at December 31 , 208. Note: If no entry Is required for a transaction/event, select "No journal entry required" In the first account fleld. b. Prepare s three-part worksheet for 208. Note: Values In the first two columns (the "parent" and "subsidlary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entrles" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries Into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entrles Into one amount and enter this amount in the credit column of the worksheet. 1. In 202, Skate developed a patent for a high-speed drill bit that Pond planned to market extensively. In accordance with generally accepted accounting standards, Skate charges all research and development costs to expense In the year the expenses are Incurred. At January 1, 205, the market value of the patent rights was estimated to be $50,000. Pond believes the patent will be of value for the next 20 years. The remainder of the differential is assigned to buildings and equipment, which also had a 20 -year estimated economic life at January 1, 20X5. All of Skate's other assets and Iiabilities Identified by Pond at the date of acquisition had book values and fair values that were relatively equal. 2. On December 31,207, Pond sold a building to Skate for $65,000 that it had purchased for $125,000 and depreciated on a straight-Iine basis over 25 years. At the time of sale, Pond reported accumulated depreciation of $75,000 and a remaining Ife of 10 years. 3. On July 1, 20x6, Skate sold land that it had purchased for $22,000 to Pond for $35,000. Pond Is planning to build a new warehouse on the property prior to the end of 209. 4. Both Pond and Skate paid dividends in 208. Required: a. Prepare all consolidation entries required to prepare a three-part consolidation working paper at December 31 , 208. Note: If no entry Is required for a transaction/event, select "No journal entry required" In the first account fleld. b. Prepare s three-part worksheet for 208. Note: Values In the first two columns (the "parent" and "subsidlary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entrles" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries Into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entrles Into one amount and enter this amount in the credit column of the worksheet
