Question
Preparing the [I] consolidation entries for sale of land Assume that during 2015 a wholly owned subsidiary sells land that originally cost $450,000 to its
Preparing the [I] consolidation entries for sale of land
Assume that during 2015 a wholly owned subsidiary sells land that originally cost $450,000 to its parent for a sale price of $500,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping.
a. Prepare the required [I] consolidation entry in 2015.
DescriptionDebitCredit[lgain]Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
b. Prepare the required [I] consolidation entry required at the end of each year 2016 through 2018.
DescriptionDebitCredit[lgain]Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
c. Assume that the parent re-sells the land outside of the consolidated group for $525,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required [I] consolidation entry for 2019.
DescriptionDebitCreditAnswer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
LandAnswer
Answer
[lgain]Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
Answer
Accounts payable
Accounts receivable
Accumulated depreciation
APIC
Cash
Common stock
Cost of goods sold
Depreciation expense
Equipment
Equity investment
Gain on sale
Loss on sale
Goodwill
Inventory
Land
Retained earnings
Sales
Answer
Answer
d. What will be the amount of gain reported in the consolidated income statement in 2019?
$Answer
Please answer all parts of the question.
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Fundamental Accounting Principles
Authors: Larson Kermit, Tilly Jensen
Volume I, 14th Canadian Edition
71051503, 978-1259066511, 1259066517, 978-0071051507
