In its 20X7 consolidated income statement, Plate Development Company reported consolidated net income of $966,000 and $42,000 of income assigned to the 30 percent noncontrolling interest in its only subsidiary, Subsidence Mining Inc. During the year, Subsidence had sold a previously mined parcel of land to Plate for a new housing development; the sales price to Plate was $475,000, and the land had a carrying amount at the time of sale of $580,000. At the beginning of the previous year, Plate had sold excavation and grading equipment to Subsidence for $291,000; the equipment had a remaining life of 6 years as of the date of sale and a book value of $210,000. The equipment originally had cost $350,000 when Plate purchased it on January 2, 20x2. The equipment never was expected to have any salvage value. Plate had acquired 70 percent of the voting shares of Subsidence eight years earlier when the fair value of its net assets was $270,000 higher than book value, and the fair value of the noncontrolling interest was $81,000 more than a proportionate share of the book value of Subsidence's net assets. All the excess over the book value was attributable to intangible assets with a remaining life of 10 years from the date of combination. Both parent and subsidiary use straight-line amortization and depreciation. Assume Plate uses the fully adjusted equity method.
In its 20X7 consolidated income statement, Plate Development Company reported consolidated net income of $966,000 and $42,000 of income assigned to the 30 percent noncontrolling interest in its only subsidiary, Subsidence Mining Inc. During the year, Subsidence had sold a previously mined parcel of land to Plate for a new housing development; the sales price to Plate was $475,000, and the land had a carrying amount at the time of sale of $580,000. At the beginning of the previous year, Plate had sold excavation and grading equipment to Subsidence for $291,000; the equipment had a remaining life of 6 years as of the date of sale and a book value of $210,000. The equipment originally had cost $350,000 when Plate purchased it on January 2, 20x2. The equipment never was expected to have any salvage value. Plate had acquired 70 percent of the voting shares of Subsidence eight years earlier when the fair value of its net assets was $270,000 higher than book value, and the fair value of the noncontrolling interest was $81,000 more than a proportionate share of the book value of Subsidence's net assets. All the excess over the book value was attributable to intangible assets with a remaining life of 10 years from the date of combination. Both parent and subsidiary use straight-line amortization and depreciation. Assume Plate uses the fully adjusted equity method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required:
a. Present the journal entry made by Plate to record the sale of equipment in 20X6 to Subsidence. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
View transaction list
Journal entry worksheet
< A
Record the entry for the sale of equipment in 2006.
Note: Enter debits before credits.
Event
1
Record entry
view transaction list
A
Consolidation Worksheet
Entries
B с
General Journal
b. Present all consolidation entries related to the intercompany transfers of land and equipment that should appear in the
consolidation worksheet used to prepare a complete set of consolidated financial statements for 20X7. (If no entry is required for
a transaction/event, select "No journal entry required" in the first account field.)
Clear entry
Note: Enter debits before credits.
Event
1
Record the entry to eliminate the loss on the purchase of land.
Record entry
Accounts
Debit
Clear entry
Credit
Debit
View general journal
Credit
view consolidation entries
Transcribed Image Text:In its 20X7 consolidated income statement, Plate Development Company reported consolidated net income of $966,000 and
$42,000 of income assigned to the 30 percent noncontrolling interest in its only subsidiary, Subsidence Mining Inc. During the
year, Subsidence had sold a previously mined parcel of land to Plate for a new housing development, the sales price to Plate was
$475,000, and the land had a carrying amount at the time of sale of $580,000. At the beginning of the previous year, Plate had
sold excavation and grading equipment to Subsidence for $291,000; the equipment had a remaining life of 6 years as of the date
of sale and a book value of $210,000. The equipment originally had cost $350,000 when Plate purchased it on January 2, 20x2.
The equipment never was expected to have any salvage value.
Plate had acquired 70 percent of the voting shares of Subsidence eight years earlier when the fair value of its net assets was
$270,000 higher than book value, and the fair value of the noncontrolling interest was $81,000 more than a proportionate share of
the book value of Subsidence's net assets. All the excess over the book value was attributable to intangible assets with a
remaining life of 10 years from the date of combination. Both parent and subsidiary use straight-line amortization and depreciation.
Assume Plate uses the fully adjusted equity method.
Required:
1 nove
cheidenen if no anterie renuired for a
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