Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

#4 Pond Corporation holds 75 percent of the voting shares of Spring Services Company. Assume Pond accounts for this investment using the equity method. During

image text in transcribed

#4

Pond Corporation holds 75 percent of the voting shares of Spring Services Company. Assume Pond accounts for this investment using the equity method. During 207, Pond sold inventory costing $75,000 to Spring Services for $105,000, and Spring Services resold one-third of the inventory in 207. Also in 207, Spring Services sold land with a book value of $120,000 to Pond for $250,000, and Pond continues to hold the land. The companles file separate tax returns and are subject to a 40 percent tax rate. Required: Prepare the consolidation entries relating to the intercorporate sale of Inventorles and land to be entered in the consolidation worksheet prepared at the end of 207. Assume that Pond uses the equity method in accounting for its Investment in Spring Services. Note: If no entry is required for a transactlon/event, select "No journal entry required" In the first account fleid. A Record the elimination entry for inventory purchases. B Record the entry to eliminate the tax expense on the unrealized profit from the inventory transfer. c Record the entry to eliminate the gain on the sale of land. D Record the entry to eliminate the tax expense on the unrealized profit from the land transfer. Note: = journal entry has been entered

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting An Essential Guide To Learning Accounting Quickly

Authors: Greg Shields

1st Edition

1978341873, 978-1978341876

More Books

Students also viewed these Accounting questions

Question

4. Pupils often misbehave in order to make the teacher look bad.

Answered: 1 week ago

Question

What is the function of a foreign key?

Answered: 1 week ago