Question
On January 1, 2016, Parent Company acquired 80% of the common stock of Subsidiary Company. On December 31, 2016, Parent held merchandise acquired from Subsidiary
On January 1, 2016, Parent Company acquired 80% of the common stock of Subsidiary Company.
On December 31, 2016, Parent held merchandise acquired from Subsidiary for $30,000. During 2016, Subsidiary sold merchandise to Parent for $150,000 at a gross profit ratio of 30%.
On December 31, 2016, Parent still owes Subsidiary $15,000 for merchandise acquired during 2016.
On December 31, 2017, Parent held merchandise acquired from Subsidiary for $40,000. During 2017, Subsidiary sold merchandise to Parent for $180,000 at a gross profit ratio of 30%.
On December 31, 2017, Parent still owes Subsidiary $20,000 for merchandise acquired during 2017.
On January 1, 2016, Parent sold to Subsidiary some equipment with a cost of $60,000 and a book value of $40,000. The sales price was $50,000. Subsidiary is depreciating the acquired equipment over a remaining five-year life, assuming no salvage value and using the straight-line method.
Required:
Prepare the worksheet eliminations that would be made on the 2016 consolidated worksheet as a result of:
1) the intercompany sale of inventory
On January 1, 2016, Parent Company acquired 80% of the common stock of Subsidiary Company.
On December 31, 2016, Parent held merchandise acquired from Subsidiary for $30,000. During 2016, Subsidiary sold merchandise to Parent for $150,000 at a gross profit ratio of 30%.
On December 31, 2016, Parent still owes Subsidiary $15,000 for merchandise acquired during 2016.
On December 31, 2017, Parent held merchandise acquired from Subsidiary for $40,000. During 2017, Subsidiary sold merchandise to Parent for $180,000 at a gross profit ratio of 30%.
On December 31, 2017, Parent still owes Subsidiary $20,000 for merchandise acquired during 2017.
On January 1, 2016, Parent sold to Subsidiary some equipment with a cost of $60,000 and a book value of $40,000. The sales price was $50,000. Subsidiary is depreciating the acquired equipment over a remaining five-year life, assuming no salvage value and using the straight-line method.
Required:
Prepare the worksheet eliminations that would be made on the 2016 consolidated worksheet as a result of:
1) the intercompany sale of inventory
2) the intercompany sale of equipment
Required:
Prepare the worksheet eliminations that would be made on the 2017 consolidated worksheet as a result of:
1) the intercompany sale of inventory
Show work
2) the intercompany sale of equipment
Show Work
2) the intercompany sale of equipment
Show Work
Required:
Prepare the worksheet eliminations that would be made on the 2017 consolidated worksheet as a result of:
1) the intercompany sale of inventory
Show Work
2) the intercompany sale of equipment
Show work
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