Downstream Intercompany Equipment Transactions On July 1, 2018, Pearl Industries sold administrative equipment with a book value of $1,000,000 to its subsidiary, Shiek Shoes, for $800,000. At the date of sale, the equipment had a remaining life of five years. It is being straight-line depreciated on Shiek’s books. It is now December 31, 2020, the end of the accounting year, and you are preparing the working paper to consolidate the trial balances of Pearl and Shiek. Shiek still owns the equipment. (c) Now assume that Shiek sells the equipment to an outside party for $400,000 on January 1, 2022. What is the consolidated gain on the sale of equipment? $Answer What is the gain reported by Shiek? $Answer Prepare the required eliminating entries for the December 31, 2022 consolidation working paper.
Downstream Intercompany Equipment Transactions
On July 1, 2018, Pearl Industries sold administrative equipment with a book value of $1,000,000 to its subsidiary, Shiek Shoes, for $800,000. At the date of sale, the equipment had a remaining life of five years. It is being straight-line
(c) Now assume that Shiek sells the equipment to an outside party for $400,000 on January 1, 2022.
What is the consolidated gain on the sale of equipment? $Answer
What is the gain reported by Shiek? $Answer
Prepare the required eliminating entries for the December 31, 2022 consolidation working paper.
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