Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Preparing the [I] consolidation entries for sale of land Assume that on June 15, 2012 a parent company sells land that originally cost $150,000 to

Preparing the [I] consolidation entries for sale of land

Assume that on June 15, 2012 a parent company sells land that originally cost $150,000 to its wholly-owned subsidiary for a sale price of $195,000. The subsidiary holds the land until it sells the land to an unaffiliated company on November 12, 2019. The parent uses the equity method to account for its Equity Investment.

a. Prepare the required [I] consolidation entry in 2012.

Description Debit Credit
[lgain] AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer
AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer

b. Prepare the required [I] consolidation entry required at the end of each year 2013 through 2018.

Description Debit Credit
[lgain] AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer
AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer

c. Assume that the subsidiary resells the land outside of the consolidated group for $255,000 on November 12, 2019. Prepare the journal entry made by the subsidiary to record the sale and the required [I] consolidation entry for 2019.

Description Debit Credit
AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer
AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer
Land Answer Answer
[lgain] AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer
AnswerAccounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales Answer Answer

d. What will be the amount of gain reported in the consolidated income statement in 2019?

$Answer

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

Step: 3

blur-text-image

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

Managerial Accounting For Undergraduates

Authors: James Wallace, Scott Hobson, Theodore Christensen

2nd Edition

1618533096, 9781618533098

More Books

Students also viewed these Accounting questions

Question

1. Send the student on an errand, or ask him or her for help.

Answered: 1 week ago