Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume on January 1, 2020, a wholly owned subsidiary sells to its parent, for a sale price of $88.000, equipment that originally cost $120,000. The subsidiary originally purchased the equipment on January 1, 2016, and depreciated the equipment assuming a 12-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). Annual depreciation expense-subsidiary 5 Annual depreciation expense-parent b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2020. 10 X 0x 0x c. Prepare the required 10 consolidation journal entry in 2020 (assume a full year of depreciation). Consolidation Worksheet Description Dgain] Gain on sale of equipment Equipment Accumulated depreciation Equipment $V 5 V pdep) Accumulated depreciation Equipment Depreciation expense Debit 0 0 0 0 0 Credit OV D✔ OM 55 ON
Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method Assume on January 1, 2020, a wholly owned subsidiary sells to its parent, for a sale price of $88.000, equipment that originally cost $120,000. The subsidiary originally purchased the equipment on January 1, 2016, and depreciated the equipment assuming a 12-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). Annual depreciation expense-subsidiary 5 Annual depreciation expense-parent b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2020. 10 X 0x 0x c. Prepare the required 10 consolidation journal entry in 2020 (assume a full year of depreciation). Consolidation Worksheet Description Dgain] Gain on sale of equipment Equipment Accumulated depreciation Equipment $V 5 V pdep) Accumulated depreciation Equipment Depreciation expense Debit 0 0 0 0 0 Credit OV D✔ OM 55 ON
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method
Assume on january 1, 2020, a wholly owned subsidiary sells to its parent, for a sale price of $88.000, equipment that originally cost $120,000. The subsidiary originally
purchased the equipment on January 1, 2016, and depreciated the equipment assuming a 12-year useful life (straight-line with no salvage value). The parent has
adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account
for its Equity Investment.
a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale).
Annual depreciation expense-subsidiary 5
Annual depreciation expense-parent 5
b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2020.
$0
x
0x
0x
c. Prepare the required [ consolidation journal entry in 2020 (assume a full year of depreciation).
Consolidation Worksheet
Description
gain] Gain on sale of equipment
Equipment
Accumulated depreciation Equipment
Didep] Accumulated depreciation Equipment
Depreciation expense
:5
DV
Debit
0x
ON
0
Ox
0✓
Credit
DV
05
Ox
OV
Ox
d. Now assume that you are preparing the year-end consolidation journal entries for the year ending December 31, 2022, Prepare the required (1) consolidation
journal entries during the holding period.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3716796-d3ee-49ce-9a37-0a767a20be97%2F09a5cd14-fe3d-4d2e-b0c1-3ebef2ddcc11%2Futhsvw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:FC
en
gle
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Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method
Assume on january 1, 2020, a wholly owned subsidiary sells to its parent, for a sale price of $88.000, equipment that originally cost $120,000. The subsidiary originally
purchased the equipment on January 1, 2016, and depreciated the equipment assuming a 12-year useful life (straight-line with no salvage value). The parent has
adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account
for its Equity Investment.
a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale).
Annual depreciation expense-subsidiary 5
Annual depreciation expense-parent 5
b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2020.
$0
x
0x
0x
c. Prepare the required [ consolidation journal entry in 2020 (assume a full year of depreciation).
Consolidation Worksheet
Description
gain] Gain on sale of equipment
Equipment
Accumulated depreciation Equipment
Didep] Accumulated depreciation Equipment
Depreciation expense
:5
DV
Debit
0x
ON
0
Ox
0✓
Credit
DV
05
Ox
OV
Ox
d. Now assume that you are preparing the year-end consolidation journal entries for the year ending December 31, 2022, Prepare the required (1) consolidation
journal entries during the holding period.
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