Problem:On January 2, 2019, Xiao Company purchased an equipment withestimated useful life of 5 years. On January 4, 2021, Xiao sold theequipment to Ganyu Company and recorded the following entry in thebooks:Cash39,000Асс. Dep.16,000Equipment40,000Gain on sale15,000Ganyu Company holds 60% of the outstanding voting shares of XiaoCompany, Xiao reported net income of P45,000, and Ganyu reported netincome from its own operations of P85,000 for 2021. There is no changein the estimated life of equipment as a result of intercompany transfer.Q#1: The controlling interest in net income is:а. 14,000b. 12,000c. 52,000d. 18,000

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Description: Problem:On January 2, 2019, Xiao Company purchased an equipment withestimated useful life of 5 years. On January 4, 2021, Xiao sold theequipment to Ganyu Company and recorded the following entry in thebooks:Cash39,000Асс. Dep.16,000Equipment40,000Ga

The Controlling Interest means the share of Parent Company in Subsidiary's Asset/Income. Such…

Business

Accounting

On January 2, 2019, Xiao Company purchased an equipment estimated useful life of 5 years. On January 4, 2021, Xiao solo equipment to Ganyu Company and recorded the following ent books: Cash 39,000 Асс. Dep. 16,000 Equipment 40,000

On January 2, 2019, Xiao Company purchased an equipment estimated useful life of 5 years. On January 4, 2021, Xiao solo equipment to Ganyu Company and recorded the following ent books: Cash 39,000 Асс. Dep. 16,000 Equipment 40,000

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

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

Problem:
On January 2, 2019, Xiao Company purchased an equipment with
estimated useful life of 5 years. On January 4, 2021, Xiao sold the
equipment to Ganyu Company and recorded the following entry in the
books:
Cash
39,000
Асс. Dep.
16,000
Equipment
40,000
Gain on sale
15,000
Ganyu Company holds 60% of the outstanding voting shares of Xiao
Company, Xiao reported net income of P45,000, and Ganyu reported net
income from its own operations of P85,000 for 2021. There is no change
in the estimated life of equipment as a result of intercompany transfer.
Q#1: The controlling interest in net income is:
а. 14,000
b. 12,000
c. 52,000
d. 18,000

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