On January 1, Year 17, Devi Corp. sold to Charlottetown Ltd. equipment it had purchased for $300,000 and used for eight years. Devi recorded a gain of $28,000 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Devi holds 70 percent of Charlottetown's voting shares. Neither company owns any other equipment. Required (a) Give the journal entry made by Devi on January 1, Year 17, to record the sale of equipment. (b) Give the journal entries recorded by Charlottetown during Year 17 to record the purchase of equipment and year-end depreciation expense. (c) What amounts should be reported on the Year 17 consolidated statements for equipment, accumulated depreciation, depreciation expense and gain on sale of equipment?

On January 1, Year 17, Devi Corp. sold to Charlottetown Ltd. equipment it had purchased for $300,000 and used for eight years. Devi recorded a gain of $28,000 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Devi holds 70 percent of Charlottetown's voting shares. Neither company owns any other equipment. Required (a) Give the journal entry made by Devi on January 1, Year 17, to record the sale of equipment. (b) Give the journal entries recorded by Charlottetown during Year 17 to record the purchase of equipment and year-end depreciation expense. (c) What amounts should be reported on the Year 17 consolidated statements for equipment, accumulated depreciation, depreciation expense and gain on sale of equipment?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2022, Kenya Company, an 80% owned subsidiary of Oliver, Inc., transferred equipment with a 10-year life (six of which remain with no salvage value) to Oliver in exchange for $78,000 cash. At the date of transfer, Kenya's records carried the equipment at a cost of $100,000 less accumulated depreciation of $40,000. Straight-line depreciation is used. Kenya reported net income of $48,000 for 2022. In preparing financial statements for 2022, how does this transfer affect the computation of consolidated net income?
Xtra Energy Company purchased a business from Angus Khan for $252,000 above the fair value of its net assets. Angus Khan had developed a goodwill over 12 years. How much would Xtra Energy amortize the goodwill for its firs year?
On January 1, 2014, Bigg Corporation sold equipment with a book value of $20,000 and a 10-year remaining useful life to its wholly-owned subsidiary, Little Corporation, for $30,000. Both Bigg and Little use the straight-line depreciation method, assuming no salvage value. On December 31, 2014, the separate company financial statements held the following balances associated with the equipment: Bigg Little Gain on sale of equipment $10,000 Depreciation expense $3,000 Equipment 30,000 Accumulated depreciation 3,000 A working paper entry to consolidate the financial statements of Bigg and Little on December 31,…
These are selected 2027 transactions for Pronghorn Corporation: Jan. 1 Mar. 1 Sept. 1 Purchased a copyright for $160,800. The copyright has a useful life of 6 years and a remaining legal life of 35 years. Purchased a patent with an estimated useful life of 5 years and a legal life of 20 years for $90,000. Purchased a small company and recorded goodwill of $150.200. Its useful life is indefinite. Indicate the amount of amortization expense on December 31, 2027. for Pronghorn Corporation. Amortization expense S
an entity acquired furniture and fittings on 1 July 2021 for $42 000. The estimated useful life of the furniture and fittings at acquisition date was 8 years and the residual value was $2000. The company sold all the furniture and fittings on 1 January 2027 for $18 000. The journal entry to reflect the sale is:
Sandhill Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Sandhill to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Sandhill's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Concord's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.)
Brea plc, which has a financial year end of 31 December, has an item of plant which meets the criteria to be classified as held for sale at 1 July 20X9. The original cost of the asset was $120,000 with an estimated useful life of 10 years and, at 1 January 20X9, had accumulated depreciation of $36,000. At 1 July 20X9 the fair value of the plant is $50,000 with costs to sell estimated at $4,000. a) Show how this asset would be accounted for in the 20X9 financial statements. b) Suppose that the plant is still held for sale at 31 December 20X9, and, at this date, the fair value and estimated costs to sell are respectively: (i) $45,000 and $4,000. (ii) $55,000 and $5,000 For(i) and (ii) show how the changes in fair value less costs to sell would be accounted for in the books of accounts
Pronghorn Corporation purchased for $ 322,000 a 30% interest in Murphy, Inc. This investment enables Pronghorn to exert significant influence over Murphy. During the year, Murphy earned net income of $ 183,000 and paid dividends of $ 60,000.Prepare Pronghorn’s journal entries related to this investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the net income enter a debit amount enter a credit amount enter an account title to record the net income enter a debit amount enter a credit amount (To record the…
Foc
Pea Company purchased 70 percent of Split Company's stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $300,000. Split had purchased the building on January 1, 20X1, at a cost of $400,000 and used straight-line depreciation on an expected life of 20 years. The asset's total estimated economic life is unchanged as a result of the intercompany sale. Required: a. What amount of depreciation expense on the building will Pea report for 20X9? Answer is complete but not entirely correct. Annual depreciation expense reported by Pea S 33,333 d. What amount of income will be assigned to the noncontrolling interest in the consolidated income statement for 20X9 if Split reports net income of $ 40,000 for 20X9? Income assigned to noncontrolling interest e. Split reports assets with a book value of $ 350,000 and liabilities of $ 150,000 at January 1, 20X9, and reports net income of $ 40,000 and dividends of $ 15,000 for 20X9. What amount will be assigned…
Godo