Direction: Analyze the case and give what is asked. On January 2, 20X1, Entity X purchases 75% of the common stock of Entity Y for P250,000. Entity Y has P200,000 and P50,000 common stock and retained earnings, respectively. On December 31, 20X1, Entity X sold equipment to Entity Y for P80,000. The equipment generally costs Entity X P120,000 when purchased four (4) years ago. Moreover, it is depreciated over its life of 10 years using the straight-line method with no residual value. The companies have the following data for years 20X1 and 20X2: Entity X Items 20X1 20X2 P38,000 147,000 Dividends Paid P60,000 159,000 Comprehensive Income from Own Operation Entity Y Items 20X1 20X2 Dividends Paid to X P22,500 50,000 P31,500 74,000 Comprehensive Income from Own Operation Required: 1. Prepare the necessary journal and elimination entries that should be made sale of equipment. Follow the steps in the handout. 2. Allocate the consolidated comprehensive income for each year. 20X1 and 20X2 about the

Direction: Analyze the case and give what is asked. On January 2, 20X1, Entity X purchases 75% of the common stock of Entity Y for P250,000. Entity Y has P200,000 and P50,000 common stock and retained earnings, respectively. On December 31, 20X1, Entity X sold equipment to Entity Y for P80,000. The equipment generally costs Entity X P120,000 when purchased four (4) years ago. Moreover, it is depreciated over its life of 10 years using the straight-line method with no residual value. The companies have the following data for years 20X1 and 20X2: Entity X Items 20X1 20X2 P38,000 147,000 Dividends Paid P60,000 159,000 Comprehensive Income from Own Operation Entity Y Items 20X1 20X2 Dividends Paid to X P22,500 50,000 P31,500 74,000 Comprehensive Income from Own Operation Required: 1. Prepare the necessary journal and elimination entries that should be made sale of equipment. Follow the steps in the handout. 2. Allocate the consolidated comprehensive income for each year. 20X1 and 20X2 about the

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Direction: Analyze the case and give what is asked.
On January 2, 20X1, Entity X purchases 75% of the common stock of Entity Y for P250,000. Entity Y has
P200,000 and P50,000 common stock and retained earnings, respectively. On December 31, 20X1, Entity X
sold equipment to Entity Y for P80,000. The equipment generally costs Entity X P120,000 when purchased four
(4) years ago. Moreover, it is depreciated over its life of 10 years using the straight-line method with no residual
value. The companies have the following data for years 20X1 and 20X2:
Entity X
Items
20X1
20X2
Dividends Paid
Comprehensive Income from Own Operation
Р38,000
147,000
Р60,000
159,000
Entity Y
Items
20X1
20X2
Dividends Paid to X
P22,500
50,000
P31,500
74,000
Comprehensive Income from Own Operation
Required:
1. Prepare the necessary journal and elimination entries that should be made in 20X1 and 20X2 about the
sale of equipment. Follow the steps in the handout.
2. Allocate the consolidated comprehensive income for each year.

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