Pearl Company acquired 90 % of Star Corporation on 1/2018. Fair values of Star's assets and liabilities approximated book values on that date. Pearl uses the initial value method to account for its investment in Star. On 1/2019, Pearl bought equipment from Star for $60,000 that had originally cost Star $120,000 and had of Accumulated depreciation at the time. The equipment had a five-year $ 110,000 remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2020 fiscal year. b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the *TA entry at 1/2020.)
Pearl Company acquired 90 % of Star Corporation on 1/2018. Fair values of Star's assets and liabilities approximated book values on that date. Pearl uses the initial value method to account for its investment in Star. On 1/2019, Pearl bought equipment from Star for $60,000 that had originally cost Star $120,000 and had of Accumulated depreciation at the time. The equipment had a five-year $ 110,000 remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2020 fiscal year. b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the *TA entry at 1/2020.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
This is what I have but it is wrong can someone help guide me through this problem
| B) | UNREALIZED NET GAIN | $ 36,000 | ORIGINAL COST | $ 120,000 | SALE OF EQUIPMENT | $ 60,000 | UNREALIZED GAIN 01/2019 | $ 45,000 | 50000*90% | ||
| (110,000) | BV 01/2019 | (10,000) | DEPRECIATION ON GAIN | $ (9,000) | 50000/5*90% | ||||||
| BOOK VALUE | 10,000 | GAIN ON SALE | 50,000 | UNREALIZED GAIN 01/2020 | $ 36,000 |
Transcribed Image Text:Pearl Company acquired
90 %
of Star Corporation on 1/2018. Fair values of Star's assets and liabilities
approximated book values on that date. Pearl uses the initial value method
to account for its investment in Star.
On 1/2019, Pearl bought equipment from Star for $60,000 that
had originally cost Star $120,000 and had
of Accumulated depreciation at the time. The equipment had a five-year
$ 110,000
remaining life and was being depreciated using the straight line method.
You are preparing the worksheet for the 2020 fiscal year.
b. How much unrealized net gain from the equipment transfer remains at the
beginning of 2020? (this is the amount you will need for the *TA entry at 1/2020.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education