Pat Company owns 100% of the outstanding shares of common stock of Sue Company. On 1/1/20 Pat Company sold a building to Sue Company for $8,000,000. At the time of the sale the building was carried on Pat Company’s books at an original cost of $10,000,000, with $8,500,000 of accumulated depreciation. At the date of the sale the building had a remaining useful life of 20 years and a $0 estimated residual value. Straight line depreciation is appropriate. It is now 12/20/20 and you are preparing the working paper to consolidate Pat and Sue Company.
Pat Company owns 100% of the outstanding shares of common stock of Sue Company. On 1/1/20 Pat Company sold a building to Sue Company for $8,000,000. At the time of the sale the building was carried on Pat Company’s books at an original cost of $10,000,000, with $8,500,000 of accumulated depreciation. At the date of the sale the building had a remaining useful life of 20 years and a $0 estimated residual value. Straight line depreciation is appropriate. It is now 12/20/20 and you are preparing the working paper to consolidate Pat and Sue Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pat Company owns 100% of the outstanding shares of common stock of Sue Company. On 1/1/20 Pat
Company sold a building to Sue Company for $8,000,000. At the time of the sale the building was carried
on Pat Company’s books at an original cost of $10,000,000, with $8,500,000 of
depreciation
estimated residual value. Straight line depreciation is appropriate. It is now 12/20/20 and you are
preparing the working paper to consolidate Pat and Sue Company.
Required;
Prepare the 12/31/20 required eliminating entries for this intercompany building sale.
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