Crane Corp. owns 75% of Blue Inc. Both companies are in the mining industry. During 2020, Crane Corp. purchased a building from Blue Inc. for $1,480. The building's original cost is $25,000 and its carrying amount in Blue Inc.'s financial statements is $1,000. Crane's Contributed Surplus account contains a credit balance of $280 from previous related-party transactions. Blue's Contributed Surplus account is nil. There is no available independent evidence of the value of the building because it is a unique building in a remote part of the country. Crane subsequently sold the building, during 2021, to an unrelated party for $1,690. Both Crane and Blue follow ASPE. Related-party transaction occurs Is the transaction in the normal course of operations? Yes No Is the change in the ownership interests in the item transferred substantive? Yes No (a) No Is the amount of the exchange supported Yes by independent evidence? Is the transaction Yes a nonmonetary exchange or transfer No (a) Is the transaction of a nonmonetary an exchange of asset? Yes products or property held for sale in the normal course of operations to facilitate sales? NO Does the Yes transaction have commercial substance? No Measure at carrying amount (b) Measure at exchange amount (a) Carrying amount is used for both monetary and nonmonetary transactions in these circumstances. (b) In rare circumstances, when the carrying amount of the item received is not available, a reasonable estimate of the carrying amount, based on the transferor's original cost, may be used to measure the exchange. How would both Crane and Blue record the purchase and sale of the building during 2020? (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Crane Corp.: Account Titles and Explanation Debit Credit Blue Inc.: Account Titles and Explanation Debit Credit Record the subsequent sale of the building by Crane during 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Assume that the transaction is in the normal course of operations for both Crane and Blue and that it has commercial substance. Record the journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Crane Corp.: Account Titles and Explanation Debit Credit Blue Inc.: Account Titles and Explanation Debit Credit Crane Corp. Account Titles and Explanation Debit Credit Calculate the total impact on income of the purchase and sale of the building for 2020 and 2021 for the consolidated reporting unit of the two companies. What can you conclude from your calculation? Total income for 2020 and 2021 will by $ e Textbook and Media List of Accounts Crane Corp. owns 75% of Blue Inc. Both companies are in the mining industry. During 2020, Crane Corp. purchased a building from Blue Inc. for $1,480. The building's original cost is $25,000 and its carrying amount in Blue Inc.'s financial statements is $1,000. Crane's Contributed Surplus account contains a credit balance of $280 from previous related-party transactions. Blue's Contributed Surplus account is nil. There is no available independent evidence of the value of the building because it is a unique building in a remote part of the country. Crane subsequently sold the building, during 2021, to an unrelated party for $1,690. Both Crane and Blue follow ASPE. Related-party transaction occurs Is the transaction in the normal course of operations? Yes No Is the change in the ownership interests in the item transferred substantive? Yes No (a) No Is the amount of the exchange supported Yes by independent evidence? Is the transaction Yes a nonmonetary exchange or transfer No (a) Is the transaction of a nonmonetary an exchange of asset? Yes products or property held for sale in the normal course of operations to facilitate sales? NO Does the Yes transaction have commercial substance? No Measure at carrying amount (b) Measure at exchange amount (a) Carrying amount is used for both monetary and nonmonetary transactions in these circumstances. (b) In rare circumstances, when the carrying amount of the item received is not available, a reasonable estimate of the carrying amount, based on the transferor's original cost, may be used to measure the exchange. How would both Crane and Blue record the purchase and sale of the building during 2020? (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Crane Corp.: Account Titles and Explanation Debit Credit Blue Inc.: Account Titles and Explanation Debit Credit Record the subsequent sale of the building by Crane during 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Assume that the transaction is in the normal course of operations for both Crane and Blue and that it has commercial substance. Record the journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Crane Corp.: Account Titles and Explanation Debit Credit Blue Inc.: Account Titles and Explanation Debit Credit Crane Corp. Account Titles and Explanation Debit Credit Calculate the total impact on income of the purchase and sale of the building for 2020 and 2021 for the consolidated reporting unit of the two companies. What can you conclude from your calculation? Total income for 2020 and 2021 will by $ e Textbook and Media List of Accounts