Big Co. owns 60% of Little Co, and uses the full equity method to account for their investment.

Assume Little had zero accumulated depreciation at acquisition several years ago.

It is now 2021. On 1/1/21 Little sells PPE to Big for $28,000. The PPE originally cost $50,000, and was originally purchased on 1/1/15.

It was expected to have a 10 year useful life.

1. What was the book value of the asset on the date of sale?

2. What was the accumulated Depreciation on the asset?

3. How much was the gain or loss on the intercompany sale?

4. Was the sale upstream or downstream?

5. How much of the gain or loss is recognized each year? Required: Prepare elimination entries and complete the following worksheets, find values of yellow cells.

10:44 Done 1 of 3 0 0 0 Questions: What was the book value of the asset on the date of sale, 1/1/21? What was the accumulated depreciation on the asset on the date of sale? How much was the gain or loss on the intercompany sale? Was the sale upstream or downstream? How much of the gain is realized/recognized each year? Value in cell E17 Value in cell E30 Value in cell E31 Value in cell F31 Value in cell G15 Value in cell G17 Value in cell G20 Value in cell 030 Value in cell 031 Value in cell P31 Value in cell 017 Value in cell 920 0 0 0 0 0 0 0 0 0 G = 110000l 150001 650001 85000 10000 55000 2022 Sales Dep. Other Expenses Gain/loss on sale of asset Investment income Net income Income to NC Interest Income to contolling interest 132001 208200 108000 Beg R/E Add: Income Less: Dividends Ending R/E 20000 10000 60000 Current assets Investment in Little PPE Acc Dep 50000 86400 200000 60000 150000 50000 25000 20000 12000 30000 Liabilities CS RE NC Interest 1 of 1 100000 15000 60000 2021 Sales Dep. Exp Other Expenses Gain/loss on sale of asset Investment income Net income Income to NC Interest Income to contolling interest 80000 10000 50000 8000 13200 38200 28000 200000 100000 Beg R/E Add: Income Less: Dividends Ending R/E 30000 20000 1 30000 Current assets Investment in Little PPE Acc Den 50000 79200 200000 45000 150000 40000 56000 20000 2000 30000 Liabilities CS RE INC Interest 0 0 0