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Please answer part D. Thanks Preparing the consolidation journal entries for sale of depreciable assets - Equity method Assume that on January 1, 2011, a
Please answer part D. Thanks
Preparing the consolidation journal entries for sale of depreciable assets - Equity method Assume that on January 1, 2011, a wholly owned subsidiary sells to its parent for a sale price of $132,000, equipment that originally cost $156,000. The subsidiary originally purchased the equipment on January 1, 2007, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the full equity method to account for its Equity Investment. a. Compute the annual depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). Annual depreciation expense-subsidiary $ 15,600 Annual depreciation expense-parent 22,000 S b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2011. $ 38,400 C. Prepare the required [I] consolidation journal entry in 2011 (assume a full year of depreciation). Consolidation Worksheet Description Debit Credit [lgain] Gain on sale of equipment 38,400 0 Equipment 24,000 0 Accumulated depreciation Equipment 0 62,400 [ldepr) Accumulated depreciation Equipment 6,400 0 Depreciation expense 0 6,400 d. Now assume that you are preparing the year-end consolidation journal entries for the year ending December 31, 2013. Prepare the required [I] consolidation journal entries during the holding period. Consolidation Worksheet Description Debit Credit [lgain] Investment in subsidiary 60,800 x Equipment 66,000 x Accumulated depreciation Equipment 126,800 x [Idepr] Accumulated depreciation Equipment 22,000 X Depreciation expense 22,000 x 0Step by Step Solution
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