On January 1, 2020, Parent Corporationpurchased equipment from its 70% ownedsubsidiary for $360,000. The total useful life ofthe equipment was 15 years when Suboriginally purchased it on January 1, 2015 for$450,000. Both Parent and Sub use straight-line depreciation.Required:a. Prepare the December 31, 2020 consolidationentry in general journal format.5. Prepare the December 31, 2023 consolidationentry in general journal format.c. Repeat requirement (b), assuming insteadthat this had been a downstream sale.

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Answered: Required: a. Prepare the December 31,…

Required: a. Prepare the December 31, 2020 consolidation entry in general journal format. p. Prepare the December 31, 2023 consolidation entry in general journal format.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (c)On 20 December 20x1, a 70%owned Subsidiary sold a piece of inventory Z which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $190,000 on this date.
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