ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
12th Edition
ISBN: 9781260824292
Author: Christensen
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.2.4E
To determine
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.
:
To determine the amount of computer equipment to be presented in the consolidated
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
H
Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant
influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000.
Prepare Concord's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter O for the amounts.)
Account Titles and Explanation
Debit
Credit
(To record the purchase.)
(To record the net income.)
(To record the dividend.)
Concord Corporation purchased for $285,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $185,000 and paid dividends of $54,000.Prepare Concord’s journal entries related to this investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
enter an account title to record the purchase
enter a debit amount
enter a credit amount
enter an account title to record the purchase
enter a debit amount
enter a credit amount
(To record the purchase.)
enter an account title to record the net income
enter a debit amount
enter a credit amount
enter an account title to record the net income
enter a debit amount
enter a credit amount
(To record the net income.)…
Chapter 7 Solutions
ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Prob. 7.8QCh. 7 - Prob. 7.9QCh. 7 - Prob. 7.10Q
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Prob. 7.13QCh. 7 - Prob. 7.14QCh. 7 - Prob. 7.15QCh. 7 - Prob. 7.16QCh. 7 - Prob. 7.17QCh. 7 - Prob. 7.18AQCh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3CCh. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.1.1ECh. 7 - Prob. 7.1.2ECh. 7 - Prob. 7.1.3ECh. 7 - Prob. 7.1.4ECh. 7 - Prob. 7.1.5ECh. 7 - Prob. 7.2.1ECh. 7 - Prob. 7.2.2ECh. 7 - Prob. 7.2.3ECh. 7 - Prob. 7.2.4ECh. 7 - Prob. 7.2.5ECh. 7 - Prob. 7.2.6ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Transfer of Depreciable Asset at Year-End Pitcher...Ch. 7 - Prob. 7.9ECh. 7 - Sale of Equipment to Subsidiary in Current Period...Ch. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.23AECh. 7 - Prob. 7.24PCh. 7 - Prob. 7.25PCh. 7 - Prob. 7.26PCh. 7 - Prob. 7.27PCh. 7 - Prob. 7.28.1PCh. 7 - Prob. 7.28.2PCh. 7 - Prob. 7.28.3PCh. 7 - Prob. 7.28.4PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33PCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.41AP
Knowledge Booster
Similar questions
- On January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry: Cash 39,000 Accumulated Depreciation 16,000 Computer Equipment 40,000 Gain on sale of equipment 15,000 TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer. In the preparation of the 20x4 consolidated balance sheet, the computer equipment will be: A. Debited for 1,000 C. Credited for 24,000B. Debited for 15,000 D. Debited for 40,000arrow_forwardOn January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry: Cash 39,000 Accumulated Depreciation 16,000 Computer Equipment 40,000 Gain on sale of equipment 15,000 TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer. The income assigned to the non-controlling interest in the 20x4 consolidated income statement will amount to: A. 12,000 C. 18,000B. 14,000 D. 52,000arrow_forwardOn January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry: Cash 39,000 Accumulated Depreciation 16,000 Computer Equipment 40,000 Gain on sale of equipment 15,000 TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer. The consolidated net income for 20x4 will amount to: A. 106,000 C. 120,000B.112,000 D. 130,000arrow_forward
- On January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry: Cash 39,000 Accumulated Depreciation 16,000 Computer Equipment 40,000 Gain on sale of equipment 15,000 TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer. In the preparation of the 20x4 consolidated income statement, depreciation expense will be: A. Debited for 5,000 in eliminating entriesB. Credited for 5,000 in eliminating entriesC. Debited for 13,000 in eliminating entriesD. Credited for 13,000 in eliminating entriesarrow_forwardSage Corporation purchased for $319,000 a 30% interest in Murphy, Inc. This investment enables Sage to exert significant influence over Murphy. During the year, Murphy earned net income of $193,000 and paid dividends of $54,000.Prepare Sage’s journal entries related to this investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)arrow_forwardPronghorn Corporation purchased for $ 322,000 a 30% interest in Murphy, Inc. This investment enables Pronghorn to exert significant influence over Murphy. During the year, Murphy earned net income of $ 183,000 and paid dividends of $ 60,000.Prepare Pronghorn’s journal entries related to this investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the net income enter a debit amount enter a credit amount enter an account title to record the net income enter a debit amount enter a credit amount (To record the…arrow_forward
- Sandhill Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Sandhill to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Sandhill's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)arrow_forwardFlounder Corporation purchased for $325,000 a 25% interest in Murphy, Inc. This investment enables Flounder to exert significant influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $66,000. Prepare Flounder's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Investment Income Cash (To record the purchase.) Investment Income Equity Investments (To record the net income.) Cash Investment Income (To record the dividend.) Debit 325000 812500 Credit 100 00 325000 812500arrow_forwardAyayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss’s net carrying amount when it was acquired.Prepare Ayayai’s journal entries related to this investment using the equity method. Ayayai applies IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record investment purchase enter a debit amount enter a credit amount enter an account title to record investment purchase enter a debit amount enter a credit amount (To record investment purchase) enter an account title to record investment income enter a debit amount enter a credit…arrow_forward
- Direction: Analyze the case and give what is asked. On January 2, 20X1, Entity X purchases 75% of the common stock of Entity Y for P250,000. Entity Y has P200,000 and P50,000 common stock and retained earnings, respectively. On December 31, 20X1, Entity X sold equipment to Entity Y for P80,000. The equipment generally costs Entity X P120,000 when purchased four (4) years ago. Moreover, it is depreciated over its life of 10 years using the straight-line method with no residual value. The companies have the following data for years 20X1 and 20X2: Entity X Items 20X1 20X2 Dividends Paid Comprehensive Income from Own Operation Р38,000 147,000 Р60,000 159,000 Entity Y Items 20X1 20X2 Dividends Paid to X P22,500 50,000 P31,500 74,000 Comprehensive Income from Own Operation Required: 1. Prepare the necessary journal and elimination entries that should be made in 20X1 and 20X2 about the sale of equipment. Follow the steps in the handout. 2. Allocate the consolidated comprehensive income for…arrow_forwardDesert Company purchased land by exchanging 25,000 shares of the company's common stock that had a $10 par value. The land was recently appraised for $250,000. Desert's stock is not actively traded on the NYSE but last year a shareholder sold a block of 250 shares at a selling price of $20 per share. What is the original cost of the Land that will be recorded by Desert, Co., on their Balance Sheet?arrow_forwardOn January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,