Peak Corporation owns 75 percent of Summit Company's voting shares, acquired on March 21, 20X5, at book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Summit Company. Cash and Receivables. Inventory Land Buildings and Equipment Investment in Summit Company Stock Debits Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Credits Peak Corporation $ 70,000 46,250 140,000 250,000 93,750 $ 600,000 $ 100,000 30,000 70,000 100,000 300,000 $ 600,000 Summit Company $ 10,000 20,000 45,000 150,000 $ 225,000 $ 42,500 12,500 45,000 100,000 25,000 $ 225,000 On January 1, 20X4, Peak paid $150,000 for equipment with a 10-year expected total economic life. The equipment was depreciated on a straight-line basis with no residual value. Summit purchased the equipment from Peak on December 31, 20X6, for $140,000. Summit sold land it had purchased for $75,000 on February 18, 20X4, to Peak for $60,000 on October 10, 20x7. Required: Prepare the consolidation entries for 20X8 related to the sale of depreciable assets and land if Peak uses the fully adjusted equity method to account for its investment in Summit.

Peak Corporation owns 75 percent of Summit Company's voting shares, acquired on March 21, 20X5, at book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Summit Company. Cash and Receivables. Inventory Land Buildings and Equipment Investment in Summit Company Stock Debits Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Credits Peak Corporation $ 70,000 46,250 140,000 250,000 93,750 $ 600,000 $ 100,000 30,000 70,000 100,000 300,000 $ 600,000 Summit Company $ 10,000 20,000 45,000 150,000 $ 225,000 $ 42,500 12,500 45,000 100,000 25,000 $ 225,000 On January 1, 20X4, Peak paid $150,000 for equipment with a 10-year expected total economic life. The equipment was depreciated on a straight-line basis with no residual value. Summit purchased the equipment from Peak on December 31, 20X6, for $140,000. Summit sold land it had purchased for $75,000 on February 18, 20X4, to Peak for $60,000 on October 10, 20x7. Required: Prepare the consolidation entries for 20X8 related to the sale of depreciable assets and land if Peak uses the fully adjusted equity method to account for its investment in Summit.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 1BCRQ

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