7-1. Assume that Big owns 80% of Little. On 4/1/05 Little sells land to Big for $90,000. The land had originally cost Little $60,000 several years earlier. On 3/2/07 Big sells the land to a third party for $85,000. Assume that in each year Little reports earnings of $50,000. Big uses the full equity method.

Required for 7-1:

• Prepare the equity method entries arising from this transaction for 2005 through 2007

• Prepare the elimination entries arising from this transaction for 2005 through 2007;

• Determine the Income to the Non-controlling interest for 2005 through 2007

7-2. Assume that Big owns 80% of Little. On 1/1/07 Big sells depreciable equipment to Little for $42,000. The equipment had originally been purchased for $60,000 on 1/1/03, with no estimated salvage value and an expected 10 year useful life. Those assumptions are unchanged at the time of sale. Assume Big uses the full equity method, and that Little reports earnings of $50,000 each year.

Required for 7-2:

• Prepare the equity method entries arising from this transaction for 2007 through 2009

• Prepare the elimination entries arising from this transaction for 2007 through 2009;

• Determine the Income to the Non-controlling interest for 2007 through 2009

7-3. Assume that Big owns 80% of Little. On 12/31/14 Little sold a building to Big for $204,000. The building had originally been purchased on 1/1/02 for $300,000, with an estimated useful life of 30 years with no estimated salvage value. Those assumptions are unchanged at the time of sale. Assume Big uses the partial equity method, and that Little reports earnings of $50,000 each year.

Required for 7-3: Prepare the appropriate elimination entries arising from this transaction for 2020 (please note that Im asking you to jump in several years after the intercompany sale).

8. In all of the questions below, assume that Big Co. owns 70% of Little Co., and that Big Co. uses the full equity method.

8-1: On 1/1/01 Big issued $1,000,000 of 10% bonds directly to Little at 102% of par. Big and Little both use the straight-line method of amortization. (a 20 year life for the bonds issued)

Required for 8-1:

Please provide all necessary elimination entries arising from this transaction for 2001 and 2002.

8-2: Assume that on 1/1/01 Big issued $1,000,000 of 20 year, 10% bonds on the open market at 104. On 1/1/09 Little bought all of these bonds on the open market at 101.8% of face value. Both Big and Little use straight-line amortization.

Required for 8-2:

Please provide all necessary elimination entries arising from this transaction for 2009, 2010, and 2011.

Assuming that Little reported earnings of $100,000 in each year, what would be the income to the non-controlling interest each year?

8-3: Assume that Big and Little started to routinely sell merchandise to each other during 2008. Information for these intercompany sales is given below:

Year	Seller	Sales price	Cost	Resold in year of sale	Resold in following year	Resold in year after that
2008	Big	100,000	80,000	70%	30%	-
2008	Little	60,000	50,000	80%	20%	-
2009	Big	120,000	90,000	50%	30%	20%
2009	Little	40,000	30,000	0%	100%
2010	Big	200,000	120,000	60%	40%

Required for 8-3:

Please provide all necessary elimination entries arising from this transaction for 2008, 2009, and 2010.

Assuming that Little reported earnings of $100,000 in each year, what would be the income to the non-controlling interest each year?

Accounting HW 7-1. Assume that Big owns 80% of Little. On 4/1/05 Little sells land to Big for $90,000. The land had originally cost Little $60,000 several years earlier. On 3/2/07 Big sells the land to a third party for $85,000. Assume that in each year Little reports earnings of $50,000. Big uses the \"full\" equity method. Required for 7-1: a) Prepare the equity method entries arising from this transaction for 2005 through 2007 b) Prepare the elimination entries arising from this transaction for 2005 through 2007; c) Determine the \"Income to the Non-controlling interest\" for 2005 through 2007 7-2. Assume that Big owns 80% of Little. On 1/1/07 Big sells depreciable equipment to Little for $42,000. The equipment had originally been purchased for $60,000 on 1/1/03, with no estimated salvage value and an expected 10 year useful life. Those assumptions are unchanged at the time of sale. Assume Big uses the full equity method, and that Little reports earnings of $50,000 each year. Required for 7-2: a) Prepare the equity method entries arising from this transaction for 2007 through 2009 b) Prepare the elimination entries arising from this transaction for 2007 through 2009; c) Determine the \"Income to the Non-controlling interest\" for 2007 through 2009 7-3. Assume that Big owns 80% of Little. On 12/31/14 Little sold a building to Big for $204,000. The building had originally been purchased on 1/1/02 for $300,000, with an estimated useful life of 30 years with no estimated salvage value. Those assumptions are unchanged at the time of sale. Assume Big uses the partial equity method, and that Little reports earnings of $50,000 each year. Required for 7-3: Prepare the appropriate elimination entries arising from this transaction for 2020 (please note that I'm asking you to jump in several years after the intercompany sale). 8. In all of the questions below, assume that Big Co. owns 70% of Little Co., and that Big Co. uses the \"full\" equity method. 8-1: On 1/1/01 Big issued $1,000,000 of 10% bonds directly to Little at 102% of par. Big and Little both use the straight-line method of amortization. (a 20 year life for the bonds issued) Required for 8-1: a) Please provide all necessary elimination entries arising from this transaction for 2001 and 2002. 8-2: Assume that on 1/1/01 Big issued $1,000,000 of 20 year, 10% bonds on the open market at 104. On 1/1/09 Little bought all of these bonds on the open market at 101.8% of face value. Both Big and Little use straight-line amortization. Required for 8-2: a) Please provide all necessary elimination entries arising from this transaction for 2009, 2010, and 2011. b) Assuming that Little reported earnings of $100,000 in each year, what would be the income to the non-controlling interest each year? 8-3: Assume that Big and Little started to routinely sell merchandise to each other during 2008. Information for these intercompany sales is given below: Year Seller Sales price Cost Resold in year of sale 2008 2008 2009 2009 2010 Big Little Big Little Big 100,000 60,000 120,000 40,000 200,000 80,000 50,000 90,000 30,000 120,000 70% 80% 50% 0% 60% Resold in following year 30% 20% 30% 100% 40% Resold in year after that 20% Required for 8-3: a) Please provide all necessary elimination entries arising from this transaction for 2008, 2009, and 2010. b) Assuming that Little reported earnings of $100,000 in each year, what would be the income to the non-controlling interest each year