a. Prepare the required 10 consolidation entry in 2015. Description Du Gain Land Cash 50,000 Accounts receivable 04 b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018 Description Debit Creda gain Retained earnings 50,000✔ Land Land Dan Equity in 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 0 comodation entry for 2019. Description Credit Dobit 525,000 04 ✔ Cred 25,000 50,000 0✔ 50,000 500,000 25,000 x d. What will be the amount of gain reported in the consolidated income statement in 2019 $ 75,000

a. Prepare the required 10 consolidation entry in 2015. Description Du Gain Land Cash 50,000 Accounts receivable 04 b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018 Description Debit Creda gain Retained earnings 50,000✔ Land Land Dan Equity in 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 0 comodation entry for 2019. Description Credit Dobit 525,000 04 ✔ Cred 25,000 50,000 0✔ 50,000 500,000 25,000 x d. What will be the amount of gain reported in the consolidated income statement in 2019 $ 75,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Preparing the 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 [] consolidation entry in 2015.
Description
gain Gain on a
Cash
b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018
Description
Debit
Credit
gain Retained earnings
Land
gain Equityment
Gain on sa
Debit
x
50,000
✓
L
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 3 consolidation entry for 2019.
Description
Credit
50,000
Debi
525,000
0✔
0✔
Credit
25,000
0✔
50,000
Dx
DU
25,000x
d. What will be the amount of gain reported in the consolidated income statement in 2017
$ 75,000

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Illustration 2. Business Combination Achieved in Stages and without transfer of consideration On January 1, 2022, Tatay, Co. and Walanay, Inc. combined. As of this date, the book values of the assets, liabilities and equity of Tatay and Walanay before the business combination are as follows: Case 1: last year, on July 1, 2021, Tatay, Co. acquired 45% ownership interest in Walanay, Inc. for P 450,000.00. Tatay classified the investment as ‘Held for Trading Securities’ (FVPL). Now, January 1, 2022, Tatay, Co. paid P250,000.00 cash from the bank in exchange for an additional 10% ownership interest in Walanay, Inc. The following relevant Information follows: a.The previously held interest of Tatay are currently quoted at 20% higher than its book value. b.The assets and liabilities of Walanay are all equivalent to their market values. c.Tatay elected to measure NCI at ‘proportionate share’. With the stated facts, answer the following: 1. How much is the unrealized gain in Profit and…