I need help to find the equity investment and accumulated depreciation in “d”.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I need help to find the equity investment and accumulated depreciation in “d”.
![Preparing the [I] consolidation entries for sale of depreciable assets-Equity method
Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $162,000, equipment that originally cost $184,000. The parent originally purchased the equipment on January 1, 2012, and
depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6
years. The parent uses the equity method to account for its Equity Investment.
a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale).
Subsidiary - depreciation $ 27,000
Parent - depreciation $ 18,400
b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016.
$ 51,600
c. Prepare the required [1] consolidation entry in 2016 (assume a full year of depreciation).
Description
Debit
Credit
lgain] Equipment
22.000 v
Gain on sale
51,600 v
Accumulated depreciation + v
73,600 v
[ldep) Accumulated depreciation
8,600 v
Depreciation expense
8,600 v
d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment).
Description
Debit
Credit
lgain) Equipment
22.000 v
Equity investment
Accumulated depreciation e
[Idep] Accumulated depreciation
Depreciation expense
8.600 v
8,600 v](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3517a2c-6956-4929-be10-ae4b44cf774e%2F748229a1-6aee-4437-bbc9-0f269e85dc27%2Fd8ey0br_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Preparing the [I] consolidation entries for sale of depreciable assets-Equity method
Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $162,000, equipment that originally cost $184,000. The parent originally purchased the equipment on January 1, 2012, and
depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6
years. The parent uses the equity method to account for its Equity Investment.
a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale).
Subsidiary - depreciation $ 27,000
Parent - depreciation $ 18,400
b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016.
$ 51,600
c. Prepare the required [1] consolidation entry in 2016 (assume a full year of depreciation).
Description
Debit
Credit
lgain] Equipment
22.000 v
Gain on sale
51,600 v
Accumulated depreciation + v
73,600 v
[ldep) Accumulated depreciation
8,600 v
Depreciation expense
8,600 v
d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment).
Description
Debit
Credit
lgain) Equipment
22.000 v
Equity investment
Accumulated depreciation e
[Idep] Accumulated depreciation
Depreciation expense
8.600 v
8,600 v
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