d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment). Description Debit Credit [Igain] Equipment 0 × 0 Equity investment 0 × 0 Accumulated depreciation → 0 ✓ 0 × [Idep] Accumulated depreciation ÷ 0 × 0 ✓ Depreciation expense 0 0 ☑ Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale). Subsidiary-depreciation $ 0 Parent depreciation $ 0 b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016. $ 0 c. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation). Description Debit Credit [Igain] Equipment 0 × 0 Gain on sale 0 × 0 ✓ Accumulated depreciation ✰ 0 0 × [Idep] Accumulated depreciation 0 × 0 ☑ Depreciation expense 0 ✓ 0 ×
d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment). Description Debit Credit [Igain] Equipment 0 × 0 Equity investment 0 × 0 Accumulated depreciation → 0 ✓ 0 × [Idep] Accumulated depreciation ÷ 0 × 0 ✓ Depreciation expense 0 0 ☑ Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale). Subsidiary-depreciation $ 0 Parent depreciation $ 0 b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016. $ 0 c. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation). Description Debit Credit [Igain] Equipment 0 × 0 Gain on sale 0 × 0 ✓ Accumulated depreciation ✰ 0 0 × [Idep] Accumulated depreciation 0 × 0 ☑ Depreciation expense 0 ✓ 0 ×
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment).
Description
Debit
Credit
[Igain] Equipment
0 ×
0
Equity investment
0 ×
0
Accumulated depreciation →
0 ✓
0 ×
[Idep] Accumulated depreciation
÷
0 ×
0 ✓
Depreciation expense
0
0 ☑](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc66a2c5c-c3c5-4180-8d8b-d17124d52514%2F2be4c8ee-6f74-4c8e-8486-d4f49699df09%2Facsoja_processed.png&w=3840&q=75)
Transcribed Image Text:d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment).
Description
Debit
Credit
[Igain] Equipment
0 ×
0
Equity investment
0 ×
0
Accumulated depreciation →
0 ✓
0 ×
[Idep] Accumulated depreciation
÷
0 ×
0 ✓
Depreciation expense
0
0 ☑
![Preparing the [I] consolidation entries for sale of depreciable assets-Equity method
Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally
purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted
the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity
Investment.
a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale).
Subsidiary-depreciation $ 0
Parent depreciation $ 0
b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016.
$ 0
c. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation).
Description
Debit
Credit
[Igain] Equipment
0 ×
0
Gain on sale
0 ×
0 ✓
Accumulated depreciation ✰
0
0 ×
[Idep] Accumulated depreciation
0 ×
0 ☑
Depreciation expense
0 ✓
0 ×](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc66a2c5c-c3c5-4180-8d8b-d17124d52514%2F2be4c8ee-6f74-4c8e-8486-d4f49699df09%2Frdqj49g_processed.png&w=3840&q=75)
Transcribed Image Text:Preparing the [I] consolidation entries for sale of depreciable assets-Equity method
Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $243,000, equipment that originally cost $276,000. The parent originally
purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted
the parent's depreciation policy and depreciates the equipment over the remaining useful life of 6 years. The parent uses the equity method to account for its Equity
Investment.
a. Compute the annual pre-consolidation depreciation expense for the subsidiary (postintercompany sale) and the parent (pre-intercompany sale).
Subsidiary-depreciation $ 0
Parent depreciation $ 0
b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016.
$ 0
c. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation).
Description
Debit
Credit
[Igain] Equipment
0 ×
0
Gain on sale
0 ×
0 ✓
Accumulated depreciation ✰
0
0 ×
[Idep] Accumulated depreciation
0 ×
0 ☑
Depreciation expense
0 ✓
0 ×
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