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Assume that Parent Company decides to sell Equipment (Cost = $10,000, Accumlated Depreciation = $1,000) to Sub for $20,000 cash. Show the sale and the
Assume that Parent Company decides to sell Equipment (Cost = $10,000, Accumlated Depreciation = $1,000) to Sub for $20,000 cash. Show the sale and the subsequent elimination entries by Parent Company | |||||
Parent Company Balance Sheet | Sale by Parent | ||||
Assets, Liabilities & Equities | Book Value | Account | DR | CR | |
Cash | $1,500,000 | ||||
AR | $10,000 | ||||
Inventory | $200,000 | ||||
Land | $640,000 | ||||
Equipment | $400,000 | ||||
Accumulated Depreciation | -$150,000 | ||||
Acquisition by Sub | |||||
Patent | $0 | Account | DR | CR | |
Total Assets | $2,600,000 | ||||
AP | $100,000 | ||||
Common Stock | $450,000 | ||||
Additional Paid In Capital | $600,000 | ||||
Retained Earnings | $1,450,000 | Elimination Entries by Parent | |||
Total Liabilities & Equity | $2,600,000 | Account | DR | CR | |
Sub Company Balance Sheet | |||||
Assets, Liabilities & Equities | Book Value | ||||
Cash | $35,000 | ||||
AR | $10,000 | ||||
Inventory | $65,000 | ||||
Land | $40,000 | ||||
PP&E | $400,000 | ||||
Accumulated Depreciation | -$150,000 | ||||
Patent | $0 | ||||
Total Assets | $400,000 | ||||
AP | $100,000 | ||||
Common Stock | $100,000 | ||||
Additional Paid In Capital | $50,000 | ||||
Retained Earnings | $150,000 | ||||
Total Liabilities & Equity | $400,000 | ||||
Assume that book Value = Fair Value | |||||
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