Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2020, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. On this date, Shipleys stockholders equity consisted of

On January 1, 2020, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. On this date, Shipleys stockholders equity consisted of the following:

Common stock $220,000

Other contributed capital 90,000

Retained earnings 320,000

Any difference between implied and book value relates to goodwill.

After the acquisition, during 2020, Pioneer sold $100,000 of land to Shipley for cash. The cost of the land was $60,000 at the date of the transfer. Also at January 2, 2020, Pioneer transferred equipment to Shipley for $18,000 cash. The equipment originally cost $20,000 and has a book value of $15,000 (three-year remaining useful life).

During 2021, Shipley sold the land to a third-party for $140,000. The equipment continued to be used by Shipley.

B. Prepare the 2020 consolidation worksheet entries only relating to the land and equipment transactions.

C. Prepare the 2021 journal entries only relating to land sale and equipment transactions.

D. Prepare the 2021 consolidation worksheet entries only relating to the land and equipment transactions.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Society Research On Audit Practice And Regulations

Authors: Wally Smieliauskas, Minlei Ye, Ping Zhang

1st Edition

1138314129, 978-1138314122

More Books

Students also viewed these Accounting questions