Chap 006

Chapter 06 - Intercompany Transfers of Services And Noncurrent Assets
CHAPTER 6 INTERCOMPANY TRANSFERS OF SERVICES AND NONCURRENT ASSETS ANSWERS TO QUESTIONS Q6-1 Profits on intercorporate sales generally are considered to be realized when the affiliate that has purchased the item sells it to a nonaffiliate. For depreciable or amortizable items that are used by the affiliate in its operations, profits are considered to be realized as the purchaser depreciates or amortizes the asset. Q6-2 An upstream sale occurs when a subsidiary sells an item to the parent company. If the asset is not resold before the end of the period, the parent is the company holding the asset and any unrealized profits are recorded on the books of the subsidiary. Q6-3 If the purchaser records the services received as an expense, both revenues and expenses will be overstated in the consolidated income statement in the period in which the intercorporate services are provided. In the event the services are capitalized by the purchaser, the cost of the asset will be overstated, depreciation expense and accumulated depreciation will be overstated if the services are assigned to a depreciable asset, and service revenue will be overstated. Q6-4 (a) Unrealized profit on an intercorporate sale generally is included in the reported net income of the seller. (b) All unrealized profit on current-period intercorporate sales must be excluded from consolidated net income until realized through resale to a nonaffiliate. Q6-5 Profits on intercompany sales are included in consolidated net income in the period in which the items are sold to a nonaffiliate. If there are unrealized profits on the books of one of the companies at the start of the period and the item is sold to a nonaffiliate during the current period, the intercompany profit is included in the computation of consolidated net income for the current period. Q6-6 The profits continue to be unrealized in this case and therefore must be eliminated from both the beginning and ending asset and retained earnings balances when consolidated statements are prepared. There should be no income statement effect for the current period. Q6-7 A downstream sale is a sale from the parent to one of its subsidiaries. If the asset is not resold before the end of the period, the subsidiary is the company holding the asset at year-end and any unrealized profits are recorded on the books of the parent company.
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Q6-8 The entire balance of unrealized profits is eliminated in all cases. While the direction of the sale will affect the allocation of unrealized profits between companies, it does not change the total amount of profit eliminated. Q6-9 Consolidated net income is reduced by the amount of unrealized profits assigned to the shareholders of the parent company. When a downstream sale occurs, all the profit is on the parent's books and consolidated net income is reduced by the full amount of any unrealized profit. On the other hand, when an upstream sale occurs, all the intercorporate profit is recorded on the books of the subsidiary and the amount of income assigned to both the parent company shareholders and the noncontrolling shareholders is reduced by a proportionate amount of any unrealized profit. Q6-10 The amount of intercorporate profit realized in the current period from prior years' sales to the parent is added to the reported net income of the subsidiary in computing income assigned to the noncontrolling interest. Q6-11 Income assigned to noncontrolling interest for the current period will be less than a proportionate share of the reported net income of the subsidiary. In determining the amount of income to be assigned to the noncontrolling interest in the consolidated income statement, the net income reported by the subsidiary must be adjusted to exclude any unrealized gain recorded during the period on the sale of depreciable assets to the parent. On the other hand, if an unrealized loss had been recorded, the basis used in assigning income to the noncontrolling interest would be greater than the reported net income of the subsidiary. Such adjustments must be made to assure that the income assigned to noncontrolling interest is based on the contribution of the subsidiary to consolidated net income rather than the amount the subsidiary may have reported as net income. Q6-12 All other factors being equal, the income assigned to noncontrolling interest will be larger if the sale occurs at the start of the current period. Some part of the gain will be considered realized in the current period as the parent depreciates the asset if the sale occurs before year-end. None of the gain will be considered realized in the period of transfer if the sale occurs at year-end. Q6-13 As in all other cases, income from the subsidiary recorded on the parent's books must be eliminated in preparing the consolidated income statement and an appropriate amount of subsidiary net income must be assigned to the noncontrolling interest if the parent owns less than 100 percent of the subsidiary's stock. The gain recorded on the parent's books also must be eliminated.
6-2
Q6-14 Depreciation expense recorded by the subsidiary is overstated from the viewpoint of the consolidated entity when the subsidiary pays the parent more than book value for the asset at the start of the period. As a result, an eliminating entry is needed to reduce depreciation expense and accumulated depreciation by the amount of excess depreciation recorded during 20X3. Q6-15 Following an intercorporate sale of a depreciable asset, the eliminating entries should adjust the balance in the asset account to reflect the original purchase price to the first owner and accumulated depreciation should be adjusted to reflect the balance that would be reported if the asset were still held by the first owner. In the case of an intercorporate sale of an intangible asset, only the unamortized balance normally is reported and an eliminating entry is needed to adjust the carrying value to that which would be reported if the asset were still held by the first owner. Q6-16 Profit on an intercorporate sale of land is considered realized at the time the purchaser sells the land to a nonaffiliate. Profit on equipment normally is considered realized as the asset is used and depreciated on the books of the purchaser. Equipment typically is considered to be used up in the production process and therefore is charged to expense over its remaining economic life, while land is not. Q6-17 A portion of the profit is considered realized each period as the asset is depreciated by the purchaser. Thus, the net amount considered unrealized decreases each period and a smaller debit to beginning retained earnings is needed. Q6-18A The balance in the investment account will depend on which method the parent uses to account for its investment in the subsidiary. If the parent uses (a) the cost method or (b) the basic equity method, no adjustments are made on the parent company's books for unrealized intercompany profits and the balance in the investment account will be the same as if there were no unrealized profits. If the parent uses (c) the fully-adjusted equity method, the balance in the investment account will be reduced by the full amount of the unrealized profit when the profit is on the parent's books and by a proportionate share of the unrealized profit when it is on the subsidiary's books.
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SOLUTIONS TO CASES C6-1 Correction of Elimination Procedures MEMO To: From: Re: Controller Plug Corporation , CPA Elimination of Intercompany Profit on Equipment
This memo is in response to our review of the elimination procedures used in preparing the consolidated statements for Plug Corporation at December 31, 20X2. You have correctly identified the need to eliminate the effects of the intercorporate sale of equipment. In preparing your consolidated statements, all intercompany balances and transactions should be eliminated. [ARB 51, Par. 6] Your eliminating entry recorded at December 31, 20X2, was: E(1) Equipment Loss on Sale of Equipment 150,000 150,000
This entry correctly eliminates the $150,000 loss recorded by Coy January 1, 20X2, on the sale of equipment to Plug and adds $150,000 to the equipment account. By adding back $150,000 to equipment, the balance is adjusted to $1,000,000 ($850,000 + $150,000). This represents the carrying value of the equipment on Coys books at the time of sale but does not reflect the purchase price paid by Coy ($1,200,000) or the accumulated depreciation at the time of sale ($200,000). Moreover, eliminating entry E(1) understates depreciation expense for the year. The correct eliminating entry at December 31, 20X2, is: E(2) Equipment Depreciation Expense Accumulated Depreciation Loss on Sale of Equipment 350,000 15,000
215,000 150,000
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C6-1 (continued) A debit of $350,000 to equipment is required to raise the balance from $850,000 recorded by Plug to $1,200,000, the initial purchase price to the consolidated entity. Depreciation expense must be increased by $15,000 from $85,000 ($850,000/10 years) recorded by Plug to $100,000 ($1,200,000/12 years) based on the initial purchase price. Accumulated depreciation must be credited by $215,000 to adjust from the $85,000 [($85,000/10 years) x 1 year] reported by Plug to $300,000 [($1,200,000/12 years) x 3 years]. As previously noted, the $150,000 loss recorded by Coy must be eliminated. If the amounts included in eliminating entry E(2) are omitted, consolidated net income for 20X2 and the retained earnings balance at December 31, 20X2, will be overstated and the balances for equipment and accumulated depreciation will be understated. Primary citation: ARB 51, Par. 6
C6-2 Elimination of Intercorporate Services MEMO To: From: Re: Chief Accountant Dream Corporation , CPA Elimination of Legal Services Provided by Parent Company
This memo is in response to our discussion regarding the elimination of intercompany services in preparing consolidated financial statements for Dream Corporation. It is my understanding that at present Dream Corporation does not eliminate such services. In preparing consolidated financial statements all intercompany balances and transactions should be eliminated. [ARB 51, Par. 6] The legal services provided by Dream Corporation to Classic Company and Plain Company are intercompany transactions that should be eliminated. If the revenues recorded by the parent are equal to the expenses recorded by the subsidiaries and both are properly recorded, elimination of these transactions will have no impact on reported net income but will reduce consolidated revenues and expenses by equal amounts. Financial statement readers will receive a more accurate picture of operations of the consolidated entity if the appropriate amounts are reported. The legal services provided to Classic Company in 20X3 should be eliminated with the following entry: E(1) Legal Services Revenue Legal Services Expense 80,000 80,000
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Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets
The information on intercorporate services provided to Plain Company indicates that an additional adjustment is needed in the consolidation process. Although Plain Company recorded its $150,000 payment to the parent as a legal expense, it should have been recorded as an investment in land to be used in future development of its strip mine. This error should be corrected on the books of Plain Company. If it is not, the eliminating entry prepared at December 31, 20X3, should include an adjustment to reflect the appropriate investment in land and would be recorded as: E(2) Legal Services Revenue Land Legal Services Expense Wage and Salary Expense 150,000 100,000
150,000 100,000
Care must be taken to capitalize only the cost of legal services in this case. The eliminating entry should contain a debit of $100,000 ($150,000/1.50) to land since Dream Corporation bills its services to the subsidiaries at 150 percent of the cost of services provided. Had Plain Company debited land for its $150,000 payment to Dream, the eliminating entry at December 31, 20X3, would have been: E(3) Legal Services Revenue Land Wage and Salary Expense 150,000 50,000 100,000
No eliminating entry would be required at December 31, 20X4, on the legal services provided to Classic Company in 20X3. The conditions of the intercorporate transfer of services to Plain Company require an eliminating entry at December 31, 20X4, and in following years, as long as Plain Company owns the strip mine. The entry at December 31, 20X4, would be: E(4) Land Retained Earnings 100,000 100,000
Had Plain Company debited land for its $150,000 payment to Dream in 20X3, the eliminating entry at December 31, 20X4, would require a $50,000 debit to retained earnings and a $50,000 credit to land. Primary citation: ARB 51, Par. 6
6-6
C6-3 Noncontrolling Interest a. When there are no unrealized profits on the subsidiary's books, a pro rata portion of the reported net income of the subsidiary is assigned to the noncontrolling interest, adjusted for the noncontrolling interests share of any amortization or write-off of differential. b. When there are no unrealized profits on the subsidiary's books, the noncontrolling interest is reported in the consolidated balance sheet at an amount equal to a pro rata portion of the book value of the net assets of the subsidiary plus the noncontrolling interests share of any remaining differential. c. The effect of unrealized intercompany profits depends on which company has recorded the profits. Those recorded on the books of the parent do not affect the income assigned to the noncontrolling interest. When subsidiary net income includes unrealized intercompany profits, the portion of consolidated net income assigned to the noncontrolling interest is reduced by its portion of the unrealized profit in the period of the intercorporate sale. (1) On a sale of land, the intercompany profit remains unrealized until the land is sold to a nonaffiliate. When the land is resold, the profit is added to the reported net income of the subsidiary in computing the portion of consolidated net income assigned to the noncontrolling interest. (2) On an intercorporate sale of a depreciable asset, a portion of the intercompany profit is considered realized each period as the purchaser depreciates the asset. Thus, in the period of the intercorporate sale, the adjustment to subsidiary net income for unrealized profits is based on the gain or loss less any portion considered realized before the end of the period. Each period thereafter, a portion of the profit or loss is considered realized and treated as an adjustment to subsidiary income in determining the portion of consolidated net income assigned to the noncontrolling interest. d. Noncontrolling shareholders of a subsidiary generally will not gain a great deal of useful information from the consolidated financial statements. Their primary focus must continue to be on the income, assets, and liabilities of the subsidiary in which they hold direct ownership. In the event there are a number of transactions with the parent or other affiliates, the success of the operations of the entire economic entity may provide information useful to the noncontrolling shareholders. Debt guarantees or other assurances by the parent may also lead to an examination of the parent company and consolidated statements.
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C6-4 Intercompany Sale of Services a. When preparing consolidated financial statements, Schwartz's revenue from the sale of services to Diamond and Diamond's expenses associated with the services acquired from Schwartz must be eliminated. The expenses related to the janitorial and maintenance activities that will be reported in the consolidated income statement will be the actual salary and associated costs incurred by Schwartz to provide the services to Diamond. The eliminations have no effect on consolidated net income because revenues and expenses of equal amount are eliminated in the preparation of the consolidated financial statements. b. Intercompany profits from the sale of services to an affiliate normally are considered realized at the time the services are provided. Realization of intercompany profits on services normally is considered to occur as the services are consumed, and services such as maintenance and repair services normally are considered to be consumed by the purchasing affiliate at the time received.
C6-5 Intercompany Profits Answers can be found in the companies' 10-K filings with the SEC and in their annual reports. Note that financial statements are often included in the Form 10-K by reference to the companys annual report. In such cases, the financial statements are often shown in a separate exhibit rather than in Item 8 of the Form 10-K. a. Century Telephone Enterprises, Inc. (www.centurytel.com), and its subsidiaries bill one another for services and materials provided in such amounts as to provide a reasonable return on investment. When preparing consolidated financial statements, the company eliminates intercompany profits on transactions with unregulated subsidiaries, but profits on transactions with regulated subsidiaries are not eliminated, as permitted by FASB Statement No. 71. This statement is applicable because phone companies are regulated as public utilities. b. Verizon (www.verizon.com) eliminates all intercompany profits. It discontinued the use of regulatory accounting as provided by FASB 71 in 1994 and now no longer applies the provisions of FASB 71. c. All of Harley-Davidsons (www.harleydavidson.com) intercompany transactions are eliminated except some occurring between the Motorcycles and Financial Services segments. Some interest and fees recognized as income by Financial Services and expense by Motorcycles are not eliminated. This leads to higher finance income and higher expenses, but net income is unaffected.
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SOLUTIONS TO EXERCISES E6-1 Multiple-Choice Questions on Intercompany Transfers [AICPA Adapted] 1. 2. 3. 4. 5. c d b a b Depreciation expense recorded by Pirn Depreciation expense recorded by Scroll Total depreciation reported Adjustment for excess depreciation charged by Scroll as a result of increase in carrying value of equipment due to gain on intercompany sale ($12,000 / 4 years) Depreciation for consolidated statements $40,000 10,000 $50,000
(3,000) $47,000
E6-2 Multiple-Choice Questions on Intercompany Transactions 1. d When only retained earnings is debited, and not the noncontrolling interest, a gain has been recorded in a prior period on the parent's books. The costs incurred by Bottom to develop the equipment are research and development costs and must be expensed as they are incurred ( FASB Statement No. 2, par. 12). Transfer to another legal entity does not cause a change in accounting treatment within the economic entity. The $39,000 paid to Gold Company will be charged to depreciation expense by Top Corporation over the remaining 3 years of ownership. As a result, Top Corporation will debit depreciation expense for $13,000 each year. Gold Company had charged $16,000 to accumulated depreciation in 2 years, for an annual rate of $8,000. Depreciation expense therefore must be reduced by $5,000 ($13,000 - $8,000) in preparing the consolidated statements. TLK Corporation will record the purchase at $39,000, the amount it paid. Gold Company had the equipment recorded at $40,000; thus, a debit of $1,000 will raise the equipment balance back to its original cost from the viewpoint of the consolidated entity.
2.
3.
4.
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E6-2 (continued) 5. b Reported net income of Gold Company Reported gain on sale of equipment Intercompany profit realized in 20X6 Realized net income of Gold Company Proportion of stock held by noncontrolling interest Income assigned to noncontrolling interests Operating income reported by Top Corporation Net income reported by Gold Company Less: Unrealized gain on sale of equipment ($15,000 - $5,000) Consolidated net income $15,000 (5,000) $ 45,000 (10,000) $ 35,000 x .40 $ 14,000 $ 85,000 45,000 $130,000 (10,000) $120,000
6.
E6-3 Elimination Entries for Land Transfer a. Eliminating entry, December 31, 20X4: E(1) Gain on Sale of Land Land 10,000 10,000
Eliminating entry, December 31, 20X5: E(1) Retained Earnings, January 1 Land 10,000 10,000
b.
Eliminating entry, December 31, 20X4: E(1) Gain on Sale of Land Land 10,000 10,000
Eliminating entry, December 31, 20X5: E(1) Retained Earnings, January 1 Noncontrolling Interest Land 6,000 4,000
10,000
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E6-4 Intercompany Services a. Consolidated net income will not change. b. One hundred percent of the intercompany services must always be eliminated. Thus, a change in the level of ownership of the subsidiary will not have an impact on the amount eliminated or on consolidated net income. c. $38,000 = $70,000 - $32,000
E6-5 Elimination Entries for Intercompany Services Two eliminating entries are required: E(1) E(2) Delivery Service Revenue Delivery Service Expense Accounts Payable Accounts Receivable 76,000 18,000 76,000 18,000
E6-6 Elimination Entries for Depreciable Asset Transfer: Year-End Sale a. Eliminating entry, December 31, 20X6 E(1) Truck Gain on Sale of Truck Accumulated Depreciation 5,000 10,000
15,000
b.
Eliminating entry, December 31, 20X7: E(1) Truck Retained Earnings, January 1 Depreciation Expense Accumulated Depreciation 5,000 10,000
1,000 14,000
Accumulated depreciation adjustment: Required [($45,000 / 15 years) x 6 years] Recorded [($40,000 / 10 years) x 1 year] Required increase
$18,000 (4,000) $14,000
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E6-7 Transfer of Land a. Eliminating entry, December 31, 20X2: E(1) Gain on Sale of Land Land 45,000 45,000
Eliminating entry, December 31, 20X3: E(1) Retained Earnings, January 1 Noncontrolling Interest Land 31,500 13,500
45,000
b.
Eliminating entries, December 31, 20X3 and 20X4: E(1) Retained Earnings, January 1 Land 30,000 30,000
E6-8 Transfer of Depreciable Asset at Year-End a. Eliminating entry, December 31, 20X5: E(1) Truck Gain on Sale of Truck Accumulated Depreciation 90,000 30,000
120,000
Computation of gain on sale of truck: Price paid by Minnow Cost of truck to Frazer Accumulated depreciation ($300,000 / 10 years) x 4 years Gain on sale of truck b. Eliminating entry, December 31, 20X6: E(1) Truck Retained Earnings, January 1 Depreciation Expense Accumulated Depreciation
$300,000 (120,000)
$210,000 (180,000) $ 30,000
90,000 30,000
5,000 115,000
Accumulated depreciation adjustment: Required [($300,000 / 10 years) x 5 years] Recorded [($210,000 / 6 years) x 1 year] Required increase
$150,000 (35,000) $115,000
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E6-9 Transfer of Depreciable Asset at Beginning of Year a. Eliminating entry, December 31, 20X5: E(1) Truck Gain on Sale of Truck Depreciation Expense Accumulated Depreciation 55,000 35,000
5,000 85,000
Computation of gain on sale of truck: Price paid by Minnow Cost of truck to Frazer Accumulated depreciation ($300,000 / 10 years) x 3 years Gain on sale of truck
$300,000 ( 90,000)
$245,000 (210,000) $ 35,000 $120,000 (35,000) $ 85,000
Accumulated depreciation adjustment: Required [($300,000 / 10 years) x 4 years] Reported [($245,000 / 7 years) x 1 year] Required increase b. Eliminating entry, December 31, 20X6: E(1) Truck Retained Earnings Depreciation Expense Accumulated Depreciation
55,000 30,000
5,000 80,000
Accumulated depreciation adjustment: Required [($300,000 / 10 years) x 5 years] Reported [($245,000 / 7 years) x 2 years] Required increase
$150,000 (70,000) $ 80,000
E6-10 Sale of Equipment to Subsidiary in Current Period a. Journal entry to record sale: Cash Accumulated Depreciation Equipment Gain on Sale of Equipment Record the sale of equipment: $84,000 = $150,000 - $80,000 + $14,000 $80,000 = ($150,000 / 15 years) x 8 years 84,000 80,000
150,000 14,000
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E6-10 (continued) b. Journal entry to record purchase: Equipment Cash Journal entry to record depreciation expense: Depreciation Expense Accumulated Depreciation c. 12,000 12,000 84,000 84,000
Eliminating entry at December 31, 20X7, to eliminate intercompany sale of equipment: E(1) Equipment Gain on Sale of Equipment Depreciation Expense Accumulated Depreciation Eliminate unrealized profit on equipment. 66,000 14,000
2,000 78,000
Adjustment to equipment Amount paid by Wainwrite to acquire building Amount paid by Lance on intercompany sale Adjustment to buildings and equipment Adjustment to depreciation expense Depreciation expense recorded by Lance Corporation ($84,000 / 7 years) Depreciation expense recorded by Wainwrite Corporation ($150,000 / 15 years) Adjustment to depreciation expense Adjustment to accumulated depreciation Amount required ($10,000 x 9 years) Amount reported by Lance ($12,000 x 1 year) Required adjustment d. $ 90,000 (12,000) $ 78,000 $ 12,000 (10,000) $ 2,000 $150,000 (84,000) $ 66,000
Eliminating entry at January 1, 20X8, to eliminate intercompany sale of equipment and prepare a consolidated balance sheet only: E(1) Equipment Retained Earnings Accumulated Depreciation Eliminate unrealized profit on equipment. 66,000 12,000
78,000
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E6-11 Upstream Sale of Equipment in Prior Period a. Consolidated net income for 20X8: Operating income reported by Baywatch Net income reported by Tubberware Amount of gain realized in 20X8 ($30,000 / 12 years) Realized net income of Tubberware Consolidated net income b. Consolidated net income for 20X8 would be unchanged. $40,000 2,500 $100,000
42,500 $142,500
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E6-11 (continued) c. Eliminating entry, December 31, 20X8: E(1) Buildings and Equipment Retained Earnings, January 1 Noncontrolling Interest Depreciation Expense Accumulated Depreciation Eliminate unrealized profit on building. Adjustment to buildings and equipment Amount paid by Tubberware to acquire building Amount paid by Baywatch on intercompany sale Adjustment to buildings and equipment Adjustment to retained earnings, January 1, 20X8 Unrealized gain recorded January 1, 20X6 Amount realized following intercompany sale ($2,500 x 2) Unrealized gain, January 1, 20X8 Proportion of ownership held by Baywatch Required adjustment Adjustment to Noncontrolling interest, January 1, 20X8 Unrealized gain at January 1, 20X8 Proportion of ownership held by noncontrolling interest Required adjustment Adjustment to depreciation expense Depreciation expense recorded by Baywatch Industries ($270,000 / 12 years) Depreciation expense recorded by Tubberware Corporation ($300,000 / 15 years) Adjustment to depreciation expense Adjustment to accumulated depreciation Amount required ($20,000 x 6 years) Amount reported by Baywatch ($22,500 x 3 years) Required adjustment $120,000 (67,500) $ 52,500 $ 22,500 $ (20,000) 2,500 $ 25,000 x $ .20 5,000 $ 30,000 (5,000) $ 25,000 x .80 $ 20,000 $300,000 (270,000) $ 30,000 30,000 20,000 5,000
2,500 52,500
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E6-12 Elimination Entries for Midyear Depreciable Asset Transfer a. Eliminating entry, December 31, 20X3: E(1) Equipment Gain on Sale of Equipment Depreciation Expense Accumulated Depreciation 2,000 10,500 1,500 11,000 $30,000 (28,000) $ 2,000 $30,000 (12,500) $28,000
Purchase price paid by parent Purchase price paid by subsidiary Required increase Purchase price paid by subsidiary Purchase price paid by parent Less: Accumulated Depreciation ($5,000 x 2 1/2 years) Book value at time of sale Gain on sale of equipment Depreciation recorded by subsidiary ($28,000/3 years) x year Depreciation recorded by parent ((E30,000/6 years) x year Required decrease Accumulated depreciation adjustment: Required [($30,000 / 6 years) x 3 years] Recorded [($28,000 / 3 1/2 years) x 1/2 year] Required increase b. Eliminating entry, December 31, 20X4: E(1) Equipment Retained Earnings, January 1 Depreciation Expense Accumulated Depreciation
(17,500) $10,500 $4,000 (28,000) $ 1,500 $15,000 (4,000) $11,000
2,000 9,000
3,000 8,000
Unrealized gain, July 1, 20X3 Realized in 20X3 Unrealized balance, January 1, 20X4 Accumulated depreciation adjustment: Required [($30,000 / 6 years) x 4 years] Recorded [($28,000 / 3 1/2 years) x 1 1/2 years] Required increase
$10,500 (1,500) $ 9,000 $20,000 (12,000) $ 8,000
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E6-13 Consolidated Net Income Computation a. Downstream sale of land: Verrys separate operating income Less: Unrealized gain on sale of land Verrys realized operating income Spawns realized net income Consolidated net income Income to noncontrolling interest: ($60,000 x .25) ($40,000 X .25) Income to controlling interest b. Upstream sale of land: Verrys separate operating income Spawns net income Less: Unrealized gain on sale of land Spawns realized net income Consolidated net income Income to noncontrolling interest: ($35,000 x .25) ($40,000 x .25) Income to controlling interest $60,000 (25,000) 20X4 $ 90,000 (25,000) $ 65,000 60,000 $125,000 (15,000) $110,000 20X5 $110,000 $110,000 40,000 $150,000 (10,000) $140,000
20X4 $ 90,000 35,000 $125,000 (8,750) $116,250
20X5 $110,000 40,000 $150,000 (10,000) $140,000
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E6-14 Elimination Entries for Intercompany Transfers a. Operating income of Grand Delivery Net income of Acme Real Estate Company Less: Unrealized profit on land sale Acmes realized net income Consolidated net income Journal entries recorded by Speedy Delivery: (1) Cash Investment in Acme Real Estate Stock Record dividends from Acme Real Estate: $10,000 x .80 Investment in Acme Real Estate Stock Income from Subsidiary Record equity-method income: $40,000 x .80 8,000 8,000 $40,000 (25,000) $65,000 15,000 $80,000
b.
(2)
32,000
32,000
c.
Eliminating entries: E(1) Income from Subsidiary Dividends Declared Investment in Acme Real Estate Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $3,000 = ($40,000 - $25,000) x .20 Common Stock Acme Real Estate Company Retained Earnings, January 1 Investment in Acme Real Estate Stock Noncontrolling Interest Eliminate beginning investment balance. Gain on Sale of Land Land Eliminate unrealized gain on land. Service Revenue Delivery Expense Eliminate courier services performed by Speedy Delivery Service. 32,000 8,000 24,000
E(2)
3,000
2,000 1,000
E(3)
300,000 100,000
320,000 80,000
E(4)
25,000
25,000
E(5)
15,000
15,000
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E6-15 Sale of Building to Parent in Prior Period a. Turner will record annual depreciation expense of $25,000 ($300,000 / 12 years). Split would have recorded annual depreciation expense of $20,000 ($400,000 / 20 years). Eliminating entry, December 31, 20X9: E(1) Buildings and Equipment Retained Earnings, January 1 Noncontrolling Interest Depreciation Expense Accumulated Depreciation Eliminate unrealized profit on building. 100,000 42,000 18,000
b.
c.
5,000 155,000
Adjustment to buildings and equipment Amount paid by Split to acquire building Amount paid by Turner on intercompany sale Adjustment to buildings and equipment Adjustment to retained earnings, January 1, 20X9 Unrealized gain, December 31, 20X8 [$300,000 - ($400,000 - $160,000)] Proportion of ownership held by Turner Required adjustment Adjustment to Noncontrolling interest, January 1, 20X9 Unrealized gain, December 31, 20X8 Proportion of ownership held by noncontrolling interest Required adjustment Adjustment to depreciation expense Depreciation expense recorded by Turner Company ($300,000 / 12 years) Depreciation expense recorded by Split Company ($400,000 / 20 years) Adjustment to depreciation expense Adjustment to accumulated depreciation Amount required ($20,000 x 9 years) Amount reported by Turner ($25,000 x 1 year) Required adjustment $180,000 (25,000) $155,000 $ 25,000 $ (20,000) 5,000 $ 60,000 x .30 $ 18,000 $ 60,000 x .70 $ 42,000 $400,000 (300,000) $100,000
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E6-15 (continued) d. Income assigned to noncontrolling interest for 20X9: Net income reported by Split Company Amount of gain realized in 20X9 ($60,000 / 12 years) Realized net income for 20X9 Proportion of ownership held by noncontrolling interest Income assigned to noncontrolling interest e. Amount assigned to noncontrolling interest in 20X9 consolidated balance sheet: Split Company net assets, January 1, 20X9 ($350,000 - $150,000) Net income for 20X9 Dividends paid in 20X9 Unrealized profit on sale of building to Turner Company ($60,000 - $5,000) Realized book value December 31, 20X9 Proportion of ownership held by noncontrolling interest Amount assigned to noncontrolling interest in December 31, 20X9, consolidated balance sheet $200,000 40,000 (15,000) (55,000) $170,000 x .30 $ 40,000 5,000 $ 45,000 x .30 $ 13,500
$ 51,000
E6-16 Intercompany Sale at a Loss a. Consolidated net income for 20X8 will be greater than Parent Company's income from operations plus Sunway's reported net income. The eliminating entries at December 31, 20X8, will result in an increase of $16,000 to consolidated net income. As a result of purchasing the equipment at less than Parent's book value, depreciation expense reported by Sunway will be $2,000 ($16,000 / 8 years) below the amount that would have been recorded by Parent. Thus, depreciation expense must be increased by $2,000 when eliminating entries are prepared at December 31, 20X9. Consolidated net income will be decreased by the full amount of the $2,000 increase in depreciation expense.
b.
6-21
E6-17 Eliminating Entries Following Intercompany Sale at a Loss a. Eliminating entry, December 31, 20X7: E(1) Buildings and Equipment Loss on Sale of Building Accumulated Depreciation Eliminate unrealized loss on building. 156,000 36,000 120,000
b.
Consolidated net income and income to controlling interest for 20X7: Operating income reported by Brown Net income reported by Transom Add: Loss on sale of building Realized net income of Transom Consolidated net income Income to noncontrolling interest ($51,000 x .30) Income to controlling interest $ 15,000 36,000 $125,000 51,000 $176,000 (15,300) $160,700
c.
Eliminating entry, December 31, 20X8: E(1) Buildings and Equipment Depreciation Expense Accumulated Depreciation Retained Earnings, January 1 Noncontrolling Interest Eliminate unrealized loss on building. 156,000 4,000
124,000 25,200 10,800
Adjustment to buildings and equipment Amount paid by Transom to acquire building Amount paid by Brown on intercompany sale Adjustment to buildings and equipment Adjustment to depreciation expense Depreciation expense recorded by Transom Company ($300,000 / 15 years) Depreciation expense recorded by Brown Corporation ($144,000 / 9 years) Adjustment to depreciation expense Adjustment to accumulated depreciation Amount required ($20,000 x 7 years) Amount reported by Brown ($16,000 x 1 year) Required adjustment $140,000 (16,000) $124,000 $ 20,000 $ (16,000) 4,000 $300,000 (144,000) $156,000
6-22
E6-17 (continued) Adjustment to retained earnings, January 1, 20X8 Unrealized loss recorded, December 31, 20X7 Proportion of ownership held by Brown Required adjustment Adjustment to Noncontrolling interest, January 1, 20X8 Unrealized loss recorded, December 31, 20X7 Proportion of ownership held by noncontrolling Interest Required adjustment d. Consolidated net income and income assigned to controlling interest in 20X8: Operating income reported by Brown Net income reported by Transom Adjustment for loss on sale of building Realized net income of Transom Consolidated net income Income assigned to noncontrolling interest ($36,000 x .30) Income assigned to controlling interest $40,000 (4,000) $150,000 36,000 $186,000 (10,800) $175,200 $36,000 x .30 $10,800 $36,000 x .70 $25,200
6-23
E6-18 Multiple Transfers of Asset a. b. c. $145,000 No gain or loss should be reported. Swanson Corporation operating income Sullivan Corporation net income Loss on sale of land ($145,000 - $130,000) Realized net income of Sullivan Corporation Proportion of stock held by Swanson Kolder Company net income Gain on sale of land ($180,000 - $130,000) Realized net income of Kolder Company Proportion of stock held by Swanson Clayton Corporation net income Gain on sale of land ($240,000 - $180,000) Realized net income of Clayton Corporation Proportion of stock held by Swanson Income assigned to controlling interest Alternate Computation: Swanson Corporation operating income Sullivan Corporation net income Kolder Company net income Clayton Corporation net income Combined income Unrealized loss recorded by Sullivan Corp. Unrealized gain recorded by Kolder Company Unrealized gain recorded by Clayton Corp. Realized income available to all shareholders Income assigned to noncontrolling interest: Sullivan Corp. ($120,000 + $15,000) x .20 Kolder Company ($60,000 - $50,000) x .30 Clayton Corp. ($80,000 - $60,000) x .10 Income assigned to controlling interest d. Eliminating entry: E(1) Gain on Sale of Land Loss on Sale of Land Land Eliminate gains and loss on land transfer: $110,000 = $50,000 + $60,000 $95,000 = $110,000 - $15,000 110,000 15,000 95,000 $ (15,000) 50,000 60,000 $150,000 120,000 60,000 80,000 $410,000 $120,000 15,000 $135,000 x .80 $ 60,000 (50,000) $ 10,000 x .70 $ 80,000 (60,000) $ 20,000 x .90 $150,000
108,000
7,000
18,000 $283,000
(95,000) $315,000
$ 27,000 3,000 2,000
(32,000) $283,000
6-24
E6-19 Elimination Entry in Period of Transfer a. b. c. $300,000 = $276,000 + $24,000 15 years = $300,000 / ($60,000 / 3 years) E(1) Trucks Retained Earnings, January 1 Noncontrolling Interest Depreciation Expense Accumulated Depreciation Eliminate unrealized gain on trucks: $21,600 = $36,000 x .60 $14,400 = $36,000 x .40 $57,000 = ($20,000 x 4 years) - ($23,000 x 1 year) 24,000 21,600 14,400
3,000 57,000
6-25
E6-20 Elimination Entry Computation a. Eliminating entry, December 31, 20X6: E(1) Equipment Gain on Sale of Equipment Depreciation Expense Accumulated Depreciation 90,000 60,000
6,000 144,000
Depreciation expense adjustment: Recorded ($360,000 / 10 years) Required [($450,000 - $150,000) / 10 years] Required decrease Accumulated depreciation adjustment: Accumulated depreciation, January 1, 20X6 20X6 depreciation required Required balance 20X6 depreciation recorded Required increase b. Eliminating entry, December 31, 20X7: E(1) Equipment Retained Earnings, January 1 Noncontrolling Interest Depreciation Expense Accumulated Depreciation
$ 36,000 (30,000) $ 6,000 $150,000 30,000 $180,000 (36,000) $144,000
90,000 37,800 16,200
6,000 138,000
Retained earnings adjustment: Unrealized profit, January 1, 20X6 Realized in 20X6 Unrealized profit, January 1, 20X7 Proportion of stock held by Stern Share of unrealized profit Accumulated depreciation adjustment: Accumulated depreciation, January 1, 20X6 Depreciation based on historical cost [($300,000 / 10 years) x 2] Required balance Depreciation recorded [($360,000 / 10) x 2] Required increase
$ 60,000 (6,000) $ 54,000 x .70 $ 37,800 $150,000 60,000 $210,000 (72,000) $138,000
6-26
E6-21 Using the Eliminating Entry to Determine Account Balances a. b. c. Pastel owns 90 percent ($9,450 / ($9,450 + $1,050) of the stock of Somber Corporation. The subsidiary was the owner. The sale was from the subsidiary to the parent, as evidenced by the debit to noncontrolling interest in the eliminating entry. Intercompany transfer price: Amount paid by Somber Corporation Increase to buildings and equipment in eliminating entry Amount paid by Pastel to Somber for equipment d. Income assigned to noncontrolling interest for 20X9: Net income reported by Somber Amount of gain realized in 20X9 ($10,500 / 7 years) Realized net income for 20X9 Proportion of ownership held by noncontrolling interest Income assigned to noncontrolling interest e. f. $ 25,000 1,500 $ 26,500 x .10 $ 2,650 $120,000 (53,500) $ 66,500
Total depreciation expense of $22,500 ($15,000 + $9,000 - $1,500) will be reported by the consolidated entity for 20X9. Eliminating entries at December 31, 20X9: E(1) Income from Subsidiary Dividends Declared Investment in Somber Corporation Stock Eliminate income from subsidiary: $22,500 = $25,000 x .90 $5,400 = $6,000 x .90 Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $2,650 = ($25,000 + $1,500) x .10 $600 = $6,000 x .10 Common Stock Somber Corporation Retained Earnings, January 1 Investment in Somber Corporation Stock Noncontrolling Interest Eliminate beginning investment balance. 22,500 5,400 17,100
E(2)
2,650
600 2,050
E(3)
300,000 200,000
450,000 50,000
6-27
E6-21 (continued) E(4) Buildings and Equipment Retained Earnings, January 1 Noncontrolling Interest Accumulated Depreciation Eliminate unrealized gain on upstream sale of equipment. Accumulated Depreciation Depreciation Expense Eliminate excess depreciation. 53,500 9,450 1,050
64,000
E(5)
1,500
1,500
E6-22 Intercompany Sale of Services a. Eliminating entries, 20X4: E(1) Consulting Revenue Consulting Fees Expense Eliminate intercompany revenue and expense. Accounts Payable Accounts Receivable Eliminate intercompany receivable/payable. 138,700 138,700
E(2)
6,600
6,600
b.
Consolidated net income and income to controlling interest for 20X4: Norgaard's separate operating income Bline's net income Consolidated net income Income to noncontrolling interest ($631,000 x .25) Income to controlling interest $2,342,000 631,000 2,973,000 (157,750) $2,815,250
6-28
E6-23A Fully Adjusted Equity Method and Cost Method a. Fully Adjusted equity-method journal entries, 20X4: (1) Cash Investment in TV Sales Company Stock Record dividends from TV Sales Company: $20,000 x .65 Investment in TV Sales Company Stock Income from Subsidiary Record equity-method income: $70,000 x .65 Income from Subsidiary Investment in TV Sales Company Stock Remove unrealized gain on sale of land. Investment in TV Sales Company Stock Income from Subsidiary Recognize portion of gain on sale of equipment: $8,000 x .65 13,000 13,000
(2)
45,500
45,500
(3)
11,000
11,000
(4)
5,200
5,200
Eliminating entries, December 31, 20X4: E(1) Income from Subsidiary Dividends Declared Investment in TV Sales Company Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $27,300 = ($70,000 + $8,000) x .35 Common Stock TV Sales Company Retained Earnings, January 1 Investment in TV Sales Company Stock Noncontrolling Interest Eliminate beginning investment balance. Gain on Sale of Land Land Eliminate unrealized gain on land. Investment in TV Sales Company Stock Noncontrolling Interest Equipment Eliminate unrealized gain on upstream sale of equipment. 39,700 13,000 26,700
E(2)
27,300
7,000 20,300
E(3)
300,000 145,000
289,250 155,750
E(4)
11,000
11,000
E(5)
26,000 14,000
40,000
6-29
E6-23A (continued) E(6) Accumulated Depreciation Depreciation Expense Eliminate excess depreciation. 8,000 8,000
b.
Cost-method journal entry recorded by Newtime Products: (1) Cash Dividend Income Record dividend income from TV Sales Company. 13,000 13,000
Cost-method eliminating entries, December 31, 20X4: E(1) Dividend Income Dividends Declared Eliminate dividend income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $27,300 = ($70,000 + $8,000) x .35 Common Stock TV Sales Company Retained Earnings, January 1 Investment in TV Sales Company Stock Noncontrolling Interest Eliminate investment balance at date of acquisition. Retained Earnings, January 1 Noncontrolling Interest Assign undistributed prior earnings of subsidiary to noncontrolling interest: $45,000 x .35 Gain on Sale of Land Land Eliminate unrealized gain on land. Retained Earnings, January 1 Noncontrolling Interest Equipment Eliminate unrealized gain on upstream sale of equipment. Accumulated Depreciation Depreciation Expense Eliminate excess depreciation. 13,000 13,000
E(2)
27,300
7,000 20,300
E(3)
300,000 100,000
260,000 140,000
E(4)
15,750
15,750
E(5)
11,000
11,000
E(6)
26,000 14,000
40,000
E(7)
8,000
8,000
6-30
SOLUTIONS TO PROBLEMS P6-24 Computation of Consolidated Net Income a. Separate operating income of Petime Corporation Reported net income of United Grain Company Unrealized profit of sale of land Realized income for 20X4 Amortization of differential ($10,000 / 10 years) Proportion of ownership held by Petime Income attributable to controlling interest Income to controlling interest b. Separate operating income of Petime Corporation Reported net income by United Grain Company Amortization of differential ($10,000 / 10 years) Proportion of stock held by Petime Income attributable to controlling interest Unrealized profit on sale of land Income to controlling interest $19,000 (7,000) $12,000 ( 1,000) $11,000 x .90 $34,000
9,900 $43,900 $34,000
$19,000 ( 1,000) $18,000 x .90
16,200 (7,000) $43,200
Reported income will decrease by $700. In the upstream case the unrealized profit ($7,000) is apportioned to both majority ($6,300) and noncontrolling ($700) shareholders. In the downstream case, it is apportioned entirely to the majority shareholders ($7,000).
P6-25 Subsidiary Net Income a. Toll Corporations reported net income for 20X4 was $94,400: Income assigned to noncontrolling shareholders Add: Unrealized profit on building ($20,000 x .25) Amortization of differential ($4,400 x .25) Income assigned to noncontrolling interest before adjustment Proportion of stock held by noncontrolling interest Reported income of Toll Computation of annual amortization: Fair value of consideration given by Bold Fair value of noncontrolling interest Total fair value Book value of Tolls assets: Common stock Retained earnings Total book value Differential paid by Bold Number of years in amortization period Annual amortization $17,500 5,000 1,10 0 $23,600 .25 $94,400 $348,000 116,000 $464,000 $150,000 270,000
(420,000) $ 44,000 10 $4,400
6-31
P6-25 (continued) b. Consolidated net income for 20X4 is $304,000: Bold Corporations operating income Toll Corporations net income Amortization of differential ($44,000 / 10 years) Unrealized profit on building Consolidated net income c. Income assigned to controlling interest is $286,500: Consolidated net income Income assigned to noncontrolling interest Income assigned to controlling interest Alternate computation: Operating income of Bold Income from Toll: Net income of Toll Unrealized profit on building Amortization of differential Realized income Portion of ownership held Income to controlling interest $304,000 (17,500) $286,500 $234,000 $94,400 (20,000) (4,400) $70,000 x .75 $234,000 94,400 (4,400) (20,000) $304,000
52,500 $286,500
6-32
P6-26 Transfer of Asset from One Subsidiary to Another Bugle Corporation Depreciation expense Fixed assets Warehouse Accumulated depreciation Gain on sale of warehouse $ ------15,000 Cook Products Corporation $ 3,000 45,000 3,000 --Consolidated Entity $ 2,000 40,000 12,000 ---
P6-27 Consolidated Eliminating Entry a. b. Master paid Rakel $460,000 ($600,000 - $140,000). Accumulated deprecation at January 1, 20X7, was $168,000, computed as follows: Purchase price paid by Rakel Amount paid by Master Gain recorded by Rakel Book value at date of sale Accumulated depreciation at date of sale c. d. Annual depreciation expense recorded by Rakel was $28,000 ($168,000/6 years). The estimated residual value was $40,000, computed as follows: Purchase price paid by Rakel Amount to be depreciated by Rakel ($28,000 x 20 years) Estimated residual value e. f. $600,000 (560,000) $ 40,000 $460,000 (28,000) $600,000 (432,000) $168,000
Master Corporation recorded depreciation expense of $30,000 in 20X7 [($460,000 $40,000) / 14 years). Reported net income of Rakel Unrealized gain on sale of building ($28,000 - $2,000) Proportion of stock held by noncontrolling interest Income assigned to noncontrolling interest $ 80,000 (26,000) $ 54,000 x .40 $ 21,600 $ 65,000 2,000 $ 67,000 x .40 $ 26,800
g.
Reported net income of Rakel Portion of gain on sale of building realized in 20X8 Proportion of stock held by noncontrolling interest Income assigned to noncontrolling interest
6-33
P6-28 Multiple-Choice Questions 1. d 2. c 3. a 4. a 5. d
P6-29 Intercompany Services Provided to Subsidiary The eliminating entry at December 31, 20X4, would be: Service Revenue Building Wage Expense The eliminating entries at December 31, 20X5, would be: Retained Earnings Building Accumulated Depreciation Depreciation Expense 30,000 1,200 30,000 1,200 110,000 30,000 80,000
P6-30 Consolidated Net Income with Intercorporate Transfers a. Entry to record intercompany transfer of equipment, 20X6: Cash Accumulated Depreciation Equipment Gain on Sale of Equipment Record sale of equipment to Subsidence Mining: $140,000 = ($350,000 / 10 years) x 4 years 240,000 140,000
350,000 30,000
6-34
P6-30 (continued) b. 20X7 eliminating entries related to intercorporate transfers: E(1) Land Loss on Sale of Land Eliminate unrealized loss on land: $60,000 = $560,000 - $500,000 Equipment Retained Earnings, January 1 Accumulated Depreciation Depreciation Expense Eliminate unrealized profit on equipment: $110,000 = $350,000 - $240,000 $25,000 = $30,000 - $5,000 $130,000 = ($35,000 x 6) - ($40,000 x 2) $5,000 = $40,000 - $35,000 60,000 60,000
E(2)
110,000 25,000
130,000 5,000
c.
Subsidence Mining's 20X7 net income was $90,000: Subsidence Mining's income to noncontrolling shareholders Noncontrolling interest's share of subsidiary income Subsidence Mining's income before adjustment Add: Amortization of differential: ($200,000 / 10 years) Less: Unrealized loss on intercompany sale of land Subsidence Mining's 20X7 net income $ 39,000 .30 $130,000 20,000 (60,000) $ 90,000
d.
Bowers operating income was $826,000: Consolidated net income Less: Income to noncontrolling interest Income assigned to controlling interest Income from Subsidence Mining: Reported net income Unrealized loss on land Amortization of differential ($200,000 / 10 years) Realized income Portion of ownership held Bowers share Realized profit on equipment ($30,000 / 6 years) Bowers 20X7 income from its separate operations $961,000 (39,000) $922,000 $ 90,000 60,000 (20,000) $130,000 x .70 $ 91,000 5,000
(96,000) $826,000
6-35
P6-31 Computation of Retained Earnings following Multiple Transfers Consolidated retained earnings, January 1, 20X8: Great Companys retained earnings, January 1 Unrealized profit on land ($16,000 x .80) Unrealized profit on depreciable assets [$22,000 - ($2,200 x 2)] Consolidated retained earnings Consolidated retained earnings, December 31, 20X8: Consolidated retained earnings, January 1 Great Companys operating income for 20X8 Less: Dividends paid in 20X8 Increase in retained earnings from Greats operations Meagers net income for 20X8 Less: Amortization of differential assigned to equipment: ($325,000 - $290,000) / 10 years Impairment of goodwill Realized income Proportion of ownership held Realization of gain on sale of building ($22,000 / 10 years) Consolidated retained earnings Alternate computation of retained earnings balance: Great Companys retained earnings, January 1 Operating income for 20X8 Dividends paid in 20X8 Investment income from Meager Company for 20X8: Meager's net income Proportion of ownership held Proportionate share of Meagers reported net income Amortization of differential assigned to equipment: [($325,000 - $290,000) x .80] / 10 years Goodwill impairment loss ($17,500 x .80) Great Companys retained earnings Unrealized profit on land ($16,000 x .80) Unrealized profit on depreciable assets [$22,000 - ($2,200 x 3)] Consolidated retained earnings $450,000 65,000 (45,000) $30,000 x .80 $65,000 (45,000) $ 30,000 (3,500) (17,500) $ 9,000 x .80 $419,600 20,000 $450,000 (12,800) (17,600) $419,600
7,200 2,200 $449,000
24,000 (2,800) (14,000) $477,200 (12,800) (15,400) $449,000
6-36
P6-32 Preparation of Consolidated Balance Sheet a. Consolidated balance sheet workpaper: Lofton Company and Temple Corporation Consolidated Balance Sheet Workpaper December 31, 20X6 Item Cash and Accounts Receivable Inventory Land Buildings and Equipment Investment in Temple Corporation Stock Debits Accum. Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings, Noncontrolling Interest Credits 881,000 450,000 Lofton Company 101,000 80,000 150,000 400,000 150,000 881,000 135,000 90,000 200,000 100,000 356,000 Temple Corp. 20,000 40,000 90,000 300,000 450,000 85,000 25,000 90,000 200,000 50,000 Eliminations Debit Credit Consolidated 121,000 120,000 250,000 709,000 (1)150,000 (3) 24,000 (1)200,000 (1) 50,000 (3) 15,000 284,000 1,200,000 244,000 115,000 290,000 100,000 347,000 104,000 1,200,000
(2) 10,000 (3) 9,000
(2)
6,000
(1)100,000 (2) 4,000 284,000
6-37
P6-32 (continued) Eliminating entries: E(1) Common Stock Temple Corporation Retained Earnings Investment in Temple Corporation Stock Noncontrolling Interest Eliminate investment account balance. Land Retained Earnings Noncontrolling Interest Eliminate unrealized loss on sale of land. Buildings and Equipment Retained Earnings Accumulated Depreciation Eliminate unrealized gain on sale of equipment. 200,000 50,000
150,000 100,000
E(2)
10,000
6,000 4,000
E(3)
9,000 15,000
24,000
Accumulated depreciation adjustment: Required [($100,000 / 10 years) x 5 years] Recorded [($91,000 / 7 years) x 2 years] Required increase Gain recorded by Temple Corporation, January 1, 20X5 Realized in 20X5 and 20X6 ($3,000 x 2 years) Unrealized balance, December 31, 20X6
$ 50,000 (26,000) $ 24,000 $ 21,000 (6,000) $ 15,000
6-38
P6-32 (continued) b. Consolidated balance sheet: Lofton Company and Subsidiary Consolidated Balance Sheet December 31, 20X6 Cash and Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Notes Payable Stockholders Equity: Controlling Interest: Common Stock Retained Earnings Total Controlling Interest Noncontrolling interest Total Stockholders Equity Total Liabilities and Stockholders' Equity $121,000 120,000 250,000 465,000 $956,000 $115,000 290,000 $100,000 347,000 $447,000 104,000
$709,000 (244,000)
551,000 $956,000
6-39
P6-33 Consolidation Workpaper with Intercompany Transfers a. Eliminating entries: E(1) Income from Subsidiary Dividends Declared Investment in Blank Corp. Stock Eliminate income from subsidiary: $19,500 = $30,000 x .65 $3,250 = $5,000 x .65 Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $6,265 = ($30,000 - $13,200 + $1,100) x .35 $1,750 = $5,000 x .35 Common Stock Blank Corporation Retained Earnings, January 1 Investment in Blank Corp. Stock Noncontrolling Interest Eliminate beginning investment balance: $85,000 = $110,000 - ($30,000 - $5,000) $94,250 = $110,500 - $16,250 $50,750= ($110,000 + $60,000 - $25,000) x .35 Sales and Service Revenue Other Expenses Eliminate intercompany services. Gain on Sale of Land Land Eliminate gain on sale of land to Blank Corporation. Gain on Sale of Building Depreciation Expense Buildings and Equipment (net) Eliminate gain on sale of building to Mist Company. 19,500 3,250 16,250
E(2)
6,265
1,750 4,515
E(3)
60,000 85,000
94,250 50,750
E(4)
24,000
24,000
E(5)
4,000
4,000
E(6)
13,200
1,100 12,100
6-40
P6-33 (continued) b. Mist Company and Blank Corporation Consolidation Workpaper December 31, 20X4 Item Sales and Service Revenue Gain on Sale of Land Gain on Sale of Building Income from Subsidiary Credits Cost of Goods Sold Depreciation Expense Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash Accounts Receivable Inventory Land Buildings and Equipment (net) Investment in Blank Corporation Stock Debits Accounts Payable Bonds Payable Common Stock Retained Earnings, from above Noncontrolling Interest Credits Mist Company 286,500 4,000 19,500 310,000 160,000 22,000 76,000 (258,000) Blank Corp. 128,500 13,200 141,700 75,000 19,000 17,700 (111,700) Eliminations Debit Credit (4) 24,000 (5) 4,000 (6) 13,200 (1) 19,500 (6) 1,100 (4) 24,000 Consolidated 391,000
391,000 235,000 39,900 69,700 (344,600) 46,400 (6,265) 40,135 198,000 40,135 238,135 (25,000) 213,135 54,500 99,000 166,000 51,000 312,900
52,000 198,000 52,000 250,000 (25,000) 225,000 32,500 62,000 95,000 40,000 200,000 110,500 540,000 35,000 180,000 100,000 225,000 540,000
30,000 85,000 30,000 115,000 ( 5,000) 110,000 22,000 37,000 71,000 15,000 125,000
(2) 6,265 66,965 (3) 85,000 66,965
25,100 25,100 (1) 3,250 (2) 1,750
151,965
30,100
(5) 4,000 (6) 12,100 (1) 16,250 (3) 94,250
270,000 20,000 80,000 60,000 110,000 270,000
683,400 55,000 260,000 100,000
(3) 60,000 151,965 211,965 30,100 (2) 4,515 (3) 50,750 211,965
213,135 55,265 683,400
6-41
P6-33 (continued) c. Mist Company and Subsidiary Consolidated Balance Sheet December 31, 20X4 $ 54,500 99,000 166,000 51,000 312,900 $683,400 $ 55,000 260,000 $100,000 213,135 $313,135 55,265
Cash Accounts Receivable Inventory Land Buildings and Equipment (net) Total Assets Accounts Payable Bonds Payable Stockholders Equity: Controlling Interest: Common Stock Retained Earnings Total Controlling Interest Noncontrolling Interest Total Stockholders Equity Total Liabilities and Stockholders' Equity
368,400 $683,400
Mist Company and Subsidiary Consolidated Income Statement Year Ended December 31, 20X4 Sales Cost of Goods Sold Depreciation Expense Other Expenses Total Expenses Consolidated Net Income Income to Noncontrolling Interest Income to Controlling Interest $235,000 39,900 69,700 $391,000
(344,600) $ 46,400 (6,265) $ 40,135
Mist Company and Subsidiary Consolidated Retained Earnings Statement Year Ended December 31, 20X4 Retained Earnings, January 1, 20X4 Income to Controlling Interest, 20X4 Dividends Declared, 20X4 Retained Earnings, December 31, 20X4 $198,000 40,135 $238,135 (25,000) $213,135
6-42
P6-34 Consolidation Workpaper in Year of Intercompany Transfer a. Eliminating entries, December 31, 20X6: E(1) Income from Subsidiary Dividends Declared Investment in Lane Company Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $4,400 = ($40,000 - $18,000) x .20 Common Stock Lane Company Retained Earnings, January 1 Differential Investment in Lane Company Stock Noncontrolling Interest Eliminate beginning investment balance. Goodwill Differential Assign differential to goodwill. Goodwill Impairment Loss Goodwill Recognize impairment of goodwill. Retained Earnings, January 1 Noncontrolling Interest Land Eliminate unrealized gain on land. Buildings and Equipment Gain on Sale of Equipment Depreciation and Amortization Expense Accumulated Depreciation Eliminate intercorporate sale of equipment. 32,000 4,000 28,000
E(2)
4,400
1,000 3,400
E(3)
100,000 105,000 50,000
204,000 51,000
E(4)
50,000
50,000
E(5)
18,000
18,000
E(6)
8,000 2,000
10,000
E(7)
5,000 20,000
2,000 23,000
Depreciation expense adjustment: Depreciation recorded ($70,000 / 10 years) Depreciation required ($75,000 / 15 years) Required decrease Accumulated depreciation adjustment: Required balance ($5,000 x 6 years) Balance recorded ($7,000 x 1 year) Required increase E(8) Accounts Payable Accounts Receivable Eliminate intercorporate receivable/payable.
$ 7,000 (5,000) $ 2,000 $30,000 (7,000) $23,000 7,000 7,000
6-43
P6-34 (continued) b. Prime Company and Lane Company Consolidation Workpaper December 31, 20X6 Item Sales Gain on Sale of Equip. Income from Subsidiary Credits Cost of Goods Sold Deprec. & Amortization Goodwill Impairment Loss Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash and Receivables Inventory Land Buildings and Equipment Investment in Lane Company Stock Differential Goodwill Debits Accum. Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings, from above Noncontrolling Interest Credits Prime Company 240,000 20,000 32,000 292,000 140,000 25,000 15,000 (180,000) Lane Company 120,000 120,000 60,000 15,000 5,000 (80,000) Eliminations Debit Credit (7) 20,000 (1) 32,000 (7) 2,000 Consolidated 360,000 360,000 200,000 38,000 18,000 20,000 (276,000) 84,000 (4,400) 79,600 330,000 79,600 409,600 (30,000) 379,600 141,000 350,000 150,000 655,000
(5) 18,000
112,000 338,000 112,000 450,000 (30,000) 420,000 113,000 260,000 80,000 500,000 232,000
40,000 105,000 40,000 145,000 (5,000) 140,000 35,000 90,000 80,000 150,000
(2)
4,400 74,400
2,000
(3)105,000 (6) 8,000 74,400 (1) (2) 187,400 (8) (7) 5,000
2,000 4,000 1,000 7,000 7,000
(6) 10,000 (1) 28,000 (3)204,000 (4) 50,000 (5) 18,000 (7) 23,000
1,185,000 205,000 60,000 200,000 300,000 420,000 1,185,000
355,000 45,000 20,000 50,000 100,000 140,000 355,000
(3) 50,000 (4) 50,000
32,000 1,328,000 273,000 73,000 250,000 300,000 379,600 52,400 1,328,000
(8)
7,000
(3)100,000 (6) 187,400 2,000 401,400 7,000 (2) 3,400 (3) 51,000 401,400
6-44
P6-34 (continued) c. Prime Company and Subsidiary Consolidated Balance Sheet December 31, 20X6 $ $655,000 (273,000) 141,000 350,000 150,000
Cash and Receivables Inventory Land Buildings and Equipment Less: Accumulated Depreciation Goodwill Total Assets Accounts Payable Bonds Payable Stockholders Equity: Controlling Interest: Common Stock Retained Earnings Total Controlling Interest Total Noncontrolling Interest Total Stockholders Equity Total Liabilities and Stockholders' Equity
382,000 32,000 $1,055,000 $ 73,000 250,000
$300,000 379,600 $679,600 52,400
732,000 $1,055,000
Prime Company and Subsidiary Consolidated Income Statement Year Ended December 31, 20X6 Sales Cost of Goods Sold Depreciation and Amortization Expense Goodwill Impairment Loss Other Expenses Total Expenses Consolidated Net Income Income to Noncontrolling Interest Income to Controlling Interest $200,000 38,000 18,000 20,000 $ 360,000
(276,000) 84,000 (4,400) $ 79,600
Prime Company and Subsidiary Consolidated Retained Earnings Statement Year Ended December 31, 20X6 Retained Earnings, January 1, 20X6 Income to Controlling Interest, 20X6 Dividends Declared, 20X6 Retained Earnings, December 31, 20X6 $ 330,000 79,600 $ 409,600 (30,000) $ 379,600
6-45
P6-35 Intercorporate Sales in Prior Years a. Eliminating entries, December 31, 20X8: E(1) Income from Subsidiary Dividends Declared Investment in Skate Company Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $5,250 = ($30,000 - $2,500 - $1,250) x .20 Common Stock Skate Company Additional Paid-In Capital Skate Company Retained Earnings, January 1 Differential Investment in Skate Company Stock Noncontrolling Interest Eliminate beginning investment balance: $63,750 = $75,000 [($50,000 / 20 years) + ($25,000 / 20 years)] x 3 years Patents Buildings and Equipment Accumulated Depreciation Differential Assign differential: $42,500 = $50,000 - [($50,000 / 20 years) x 3 years] $3,750 = ($25,000 / 20 years) x 3 years Amortization Expense Depreciation Expense Patents Accumulated Depreciation Amortize differential. Buildings and Equipment Retained Earnings, January 1 Depreciation Expense Accumulated Depreciation Eliminate unrealized profit on buildings: $60,000 = $125,000 - $65,000 $15,000 = $65,000 - ($125,000 - $75,000) $ 1,500 = ($65,000 / 10 years) ($125,000 / 25 years) $73,500 = ($5,000 x 16 years) - ($6,500 x 1 year) 21,000 8,000 13,000
E(2)
5,250
2,000 3,250
E(3)
30,000 20,000 150,000 63,750
211,000 52,750
E(4)
42,500 25,000
3,750 63,750
E(5)
2,500 1,250
2,500 1,250
E(6)
60,000 15,000
1,500 73,500
6-46
P6-35 (continued) E(7) Retained Earnings, January 1 Noncontrolling Interest Land Eliminate unrealized profit on land. 10,400 2,600
13,000
6-47
P6-35 (continued) b. Pond Corporation and Skate Company Consolidation Workpaper December 31, 20X8 Item Sales Income from Subsidiary Interest Income Credits Cost of Goods Sold Other Operating Expenses Depreciation Expense Interest Expense Miscellaneous Expenses Amortization Expense Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Net Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash Accounts Receivable Interest and Other Receivables Inventory Land Buildings and Equipment Investment in Skate Company Stock Investment in Tin Co. Bonds Bond Discount Differential Patents Debits Pond Corp. 450,000 21,000 14,900 485,900 285,000 50,000 35,000 24,000 11,900 (405,900) Skate Co. 250,000 250,000 136,000 40,000 24,000 10,500 9,500 (220,000) Eliminations Debit Credit (1) 21,000 Consolidated 700,000 14,900 714,900 421,000 90,000 58,750 34,500 21,400 2,500 (628,150) 86,750 (5,250) 81,500
(5) (5)
1,250 2,500
(6)
1,500
80,000 241,400 80,000 321,400 (30,000) 291,400 68,400 130,000 45,000 140,000 50,000 400,000 224,000 134,000
30,000 150,000 30,000 180,000 (10,000) 170,000 47,000 65,000 10,000 50,000 22,000 240,000
(2)
5,250 30,000
1,500
(3)150,000 (6) 15,000 (7) 10,400 30,000 (1) (2) 205,400
1,500 8,000 2,000 11,500
216,000 81,500 297,500 (30,000) 267,500 115,400 195,000 55,000 190,000 59,000 725,000
(4) 25,000 (6) 60,000
(7) 13,000
(1) 13,000 (3)211,000 3,000 437,000 134,000 3,000 40,000 1,516,400
1,191,400
(3) 63,750 (4) 42,500
(4) 63,750 (5) 2,500
6-48
P6-35 (continued) Item Accum. Depreciation Accounts Payable Interest and Other Payables Bonds Payable Common Stock Pond Corporation Skate Company Additional Paid-In Capital Retained Earnings, from above Noncontrolling Interest Credits Pond Corp. 185,000 65,000 45,000 300,000 150,000 155,000 291,400 Skate Co. 94,000 11,000 12,000 100,000 30,000 20,000 170,000 (3) 30,000 (3) 20,000 205,400 (7) 2,600 1,191,400 437,000 449,250 11,500 (2) 3,250 (3) 52,750 449,250 Eliminations Debit Credit (4) 3,750 (5) 1,250 (6) 73,500 Consolidated
357,500 76,000 57,000 400,000 150,000 155,000 267,500 53,400 1,516,400
6-49
P6-36 Intercorporate Sale of Land and Depreciable Asset a. Income assigned to noncontrolling interest: Net income of Morris Gain on sale of equipment to parent Gain realized prior to 20X5 Amortization of differential: Buildings and equipment ($25,000 / 10 years) Copyright ($17,000 / 5 years) Realized income Portion of ownership held Income to noncontrolling interest Gain on sale of equipment to parent: Sale price to Topp Purchase price Accumulated depreciation [($100,000 - $10,000)/10 years] x 2 years Gain on sale b. $9,600 (1,200) $ 30,000 (8,400) (2,500) (3,400) $15,700 x .30 $ 4,710 $91,600 (82,000) $ 9,600
$100,000 (18,000)
Reconciliation between book value and investment balance at December 31, 20X5: Underlying book value of Morris Company stock: Common stock outstanding Retained earnings, January 1, 20X5 Net income for 20X5 Dividends paid in 20X5 Net book value Portion of ownership held by Topp Net book value of ownership held by Topp Unamortized differential: Buildings and equipment [($25,000 x 7/10 years) x .70] Copyright [($17,000 x 2/5 years) x .70] Investment in Morris Company stock $100,000 100,000 30,000 ( 5,000) $225,000 x .70 $157,500 12,250 4,760 $174,510
c.
Eliminating entries: E(1) Income from Subsidiary Dividends Declared Investment in Morris Company Stock Eliminate income from subsidiary: $16,870 = ($30,000 x .70) - $1,750 - $2,380 $3,500 = $5,000 x .70 Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest. 16,870 3,500 13,370
E(2)
4,710
1,500 3,210
6-50
P6-36 (continued) E(3) Common Stock Morris Company Retained Earnings, January 1 Differential Investment in Morris Company Stock Noncontrolling Interest Eliminate beginning investment balance: $30,200 = ($25,000 x 8/10) + ($17,000 x 3/5) Buildings and Equipment Copyright Accumulated Depreciation Differential Assign beginning differential. Depreciation Expense Amortization Expense Accumulated Depreciation Copyright Amortize differential. Retained Earnings, January 1 Land Eliminate unrealized gain on land. Equipment Gain on Sale of Equipment Depreciation Expense Accumulated Depreciation Eliminate intercorporate sale of equipment: $8,400 = $100,000 - $91,600 $9,600 = $91,600 - ($100,000 - $18,000) $1,200 = ($81,600 / 8 years) - ($90,000 / 10 years) $16,800 = ($9,000 x 3 years) - ($10,200 x 1 year) 100,000 100,000 30,200
161,140 69,060
E(4)
25,000 10,200
5,000 30,200
E(5)
2,500 3,400
2,500 3,400
E(6)
11,000
11,000
E(7)
8,400 9,600
1,200 16,800
6-51
P6-36 (continued) d. Topp Corporation and Morris Company Consolidation Workpaper December 31, 20X5 Item Sales Other Income Gain on Sale of Equipment Income from Subsidiary Credits Cost of Goods Sold Depreciation Expense Interest Expense Other Expenses Amortization Expense Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash Accounts Receivable Interest and Other Receivables Inventory Land Buildings and Equipment Bond Discount Investment in Morris Company Stock Differential Copyrights Debits Topp Corp. 450,000 28,250 16,870 495,120 375,000 25,000 24,000 28,000 (452,000) Morris Co. 190,400 9,600 200,000 110,000 10,000 33,000 17,000 (170,000) (7) 9,600 (1) 16,870 (5) (5) 2,500 3,400 (7) 1,200 Eliminations Debit Credit Consolidated 640,400 28,250
668,650 485,000 36,300 57,000 45,000 3,400 (626,700) 41,950 (4,710) 37,240 165,240 37,240 202,480 (30,000) 172,480 73,850 135,000 40,000 330,000 129,000 588,400 15,000
43,120 176,240 43,120 219,360 (30,000) 189,360 15,850 65,000 30,000 150,000 80,000 315,000
30,000 100,000 30,000 130,000 (5,000) 125,000 58,000 70,000 10,000 180,000 60,000 240,000 15,000
(2)
4,710 37,080
1,200
(3)100,000 (6) 11,000 37,080 (1) (2) 148,080
1,200 3,500 1,500 6,200
(4) 25,000 (7) 8,400
(6) 11,000
174,510 (3) 30,200 (4) 10,200
830,360
633,000
(1) 13,370 (3)161,140 (4) 30,200 (5) 3,400
6,800 1,318,050
6-52
P6-36 (continued) Item Accum. Depreciation Buildings and Equip. Accounts Payable Other Payables Bonds Payable Common Stock Topp Corporation Morris Company Additional Paid-In Capital Retained Earnings, from above Noncontrolling Interest Credits Topp Corp. 120,000 61,000 30,000 250,000 150,000 30,000 189,360 125,000 148,080 6,200 (2) 3,210 (3) 69,060 321,880 Morris Co. 60,000 28,000 20,000 300,000 100,000 (3)100,000 Eliminations Debit Credit (4) 5,000 (5) 2,500 (7) 16,800 Consolidated
204,300 89,000 50,000 550,000 150,000 30,000 172,480 72,270 1,318,050
830,360
633,000
321,880
P6-37 Consolidation Workpaper in Year following Intercompany Transfer a. Reconciliation of underlying book value and balance in investment account: Net book value reported by Lane Company Common stock outstanding Retained earnings balance, January 1, 20X7 Net income for 20X7 Dividends paid in 20X7 Retained earnings balance, December 31, 20X7 Proportion of stock held by Prime Company Add: Goodwill (50,000 x .80) Balance in investment account $100,000
$140,000 45,000 (35,000)
150,000 $250,000 x .80 $200,000 40,000 $240,000
6-53
P6-37 (continued) b. Eliminating entries, December 31, 20X7: E(1) Income from Subsidiary Dividends Declared Investment in Lane Company Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $9,000 = $45,000 x .20 Common Stock Lane Company Retained Earnings, January 1 Differential Investment in Lane Company Stock Noncontrolling Interest Eliminate beginning investment balance: $50,000 = ($160,000 + $40,000) ($50,000 + $100,000) $232,000 = $240,000 - $8,000 $58,000 = ($100,000 + $140,000 + $50,000) x .20 Goodwill Retained Earnings, January 1 Noncontrolling Interest Differential Assign differential to goodwill. Retained Earnings, January 1 Noncontrolling Interest Land Eliminate unrealized profit on land. Buildings and Equipment Retained Earnings, January 1 Depreciation and Amortization Expense Accumulated Depreciation Eliminate unrealized profit on equipment. 36,000 28,000 8,000
E(2)
9,000
7,000 2,000
E(3)
100,000 140,000 50,000
232,000 58,000
E(4)
25,000 20,000 5,000
50,000
E(5)
8,000 2,000
10,000
E(6)
5,000 18,000
2,000 21,000
Accumulated depreciation adjustment: Required balance ($5,000 x 7 years) Balance recorded ($7,000 x 2 years) Required increase E(7) Accounts Payable Accounts Receivable Eliminate intercorporate receivable/payable.
$ 35,000 (14,000) $ 21,000 4,000 4,000
6-54
P6-37 (continued) b. Prime Company and Lane Company Consolidation Workpaper December 31, 20X7 Item Prime Lane Company Company 250,000 150,000 36,000 286,000 150,000 160,000 80,000 25,000 15,000 20,000 10,000 (205,000) (105,000) Eliminations Debit Credit (1) 36,000 (6) 2,000 Consolidated 400,000 400,000 240,000 38,000 30,000 (308,000) 92,000 (9,000) 83,000
Sales Income from Subsidiary Credits Cost of Goods Sold Deprec. and Amortization Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1
81,000 420,000
45,000 140,000
(2)
9,000 45,000
2,000
Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash and Receivables Inventory Land Buildings and Equipment Investment in Lane Company Stock Differential Goodwill Debits Accum. Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings, from above Noncontrolling Interest Credits
81,000 501,000 (60,000) 441,000 151,000 240,000 100,000 500,000 240,000
45,000 185,000 (35,000) 150,000 55,000 100,000 80,000 150,000
(3) 140,000 (4) 20,000 (5) 8,000 (6) 18,000 45,000
2,000 (1) 28,000 (2) 7,000
374,000 83,000 457,000 (60,000) 397,000 202,000 340,000 170,000 655,000
231,000 (7) (6) 5,000
37,000 4,000
(5) 10,000 (1) 8,000 (3)232,000 (4) 50,000
1,231,000 230,000 60,000 200,000 300,000 441,000 1,231,000
385,000 60,000 25,000 50,000 100,000 150,000 385,000
(3) 50,000 (4) 25,000
25,000 1,392,000 311,000 81,000 250,000 300,000 397,000 53,000 1,392,000
(7)
4,000
(6) 21,000
(3)100,000 231,000 (4) 5,000 (5) 2,000 422,000 37,000 (2) 2,000 (3) 58,000 422,000
6-55
P6-38 Incomplete Data (a) (b) (c) (d) (e) (f) $100,000 $140,000 $250,000 = $593,000 - $343,000 $100,000 = ($126,000 - $35,000) + [($25,000 + $85,000) - $101,000] $4,500 = [($106,200 + $70,800) - ($50,000 + $70,000 + $30,000)] / 6 years Investment in Shadow Company Stock: $106,200 Purchase price, January 1, 20X4 30,000 Undistributed earnings from January 1, 20X4, to January 1, 20X7 [($80,000 - $30,000) x .60] 6,000 Undistributed income for 20X7 ($10,000 x .60) (10,800) Amortization of differential [($27,000 / 6 years) x 4 years] x .60 $131,400 Balance in investment account at December 31, 20X7 $7,000 = ($70,000 + $90,000) - $153,000 $-0$510,000 = $345,000 + $150,000 + ($60,000 - $45,000) $278,000 = $180,000 + $80,000 + [($60,000 / 5 years) x 4 years] - [($45,000 / 3 years) x 2 years)
(g) (h) (i) (j) (k)
Consolidated retained earnings at January 1, 20X7: $379,400 Retained earnings reported by Mound Corporation Mound's share of unrealized profit on sale of equipment $9,000 Gain recorded: [$45,000 - ($60,000 x 3 / 5)] (3,000) Amortized in 20X6: ($9,000 / 3) $6,000 Unamortized gain x .60 Mound's proportionate share (3,600) $3,600 Reduction of Mounds retained earnings $375,800 Consolidated retained earnings Income to noncontrolling shareholders: $ 30,000 Shadow's 20X7 net income ($250,000 - $195,000 - $10,000 - $15,000) 3,000 Realized profit on 20X6 sale of equipment to Mound (4,500) Amortization of differential $ 28,500 Realized net income x .40 $ 11,400 Income to noncontrolling shareholders
(l)
6-56
P6-39 Intercompany Sale of Equipment at a Loss in Prior Period a. Eliminating entries: E(1) Income from Subsidiary Dividends Declared Investment in Block Corporation Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $5,700 = ($60,000 - $3,000) x .10 Common Stock Block Corporation Retained Earnings, January 1 Investment in Block Corporation Stock Noncontrolling Interest Eliminate beginning investment balance. Buildings and Equipment Depreciation Expense Retained Earnings, January 1 Noncontrolling Interest Accumulated Depreciation Eliminate intercorporate sale of equipment. Adjustment to depreciation expense Depreciation based on original cost ($90,000 / 10 years) Depreciation based on intercompany sale price ($48,000 / 8 years) Adjustment to depreciation expense Adjustment to retained earnings Book value of equipment at time of sale [$90,000 - ($9,000 x 2 years)] Intercompany sale price Loss recorded by Block on sale Partial realization of loss [($9,000 - $6,000) x 2 years] Loss not yet realized for consolidated statement purposes Foster's proportionate share Adjustment to retained earnings $72,000 (48,000) $24,000 (6,000) $18,000 x .90 $16,200 $ 9,000 (6,000) $ 3,000 54,000 18,000 36,000
E(2)
5,700
2,000 3,700
E(3)
50,000 150,000
180,000 20,000
E(4)
42,000 3,000
16,200 1,800 27,000
6-57
P6-39 (continued) Adjustment to noncontrolling interest Loss not yet realized for consolidated statement purposes Proportion of ownership held by noncontrolling interest Adjustment to noncontrolling interest Adjustment to accumulated depreciation Accumulated depreciation based on original cost [($90,000 / 10 years) x 5 years] Accumulated depreciation recorded by Foster [($48,000 / 8 years) x 3 years] Adjustment to accumulated depreciation $45,000 (18,000) $27,000 $18,000 x .10 $ 1,800
6-58
P6-39 (continued) b. Foster Company and Block Corporation Consolidation Workpaper December 31, 20X9 Item Sales Other Income Income from Subsidiary Credits Cost of Goods Sold Depreciation Expense Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash Accounts Receivable Other Receivables Inventory Land Buildings and Equipment Investment in Block Corporation Stock Debits Foster Co. 680,000 26,000 54,000 760,000 500,000 45,000 95,000 (640,000) Block Corp. 385,000 15,000 400,000 250,000 15,000 75,000 (340,000) Eliminations Debit Credit Consolidated 1,065,000 41,000 1,106,000 750,000 63,000 170,000 (983,000) 123,000 (5,700) 117,300 (4) 16,200 (1) 18,000 (2) 2,000 212,700 36,200 251,200 117,300 368,500 (40,000) 328,500 114,400 170,000 50,000 330,000 140,000 792,000 (1) 36,000 (3)180,000
(1) 54,000 (4) 3,000
120,000 235,000 120,000 355,000 (40,000) 315,000 82,000 80,000 40,000 200,000 80,000 500,000 216,000 1,198,000
60,000 150,000 60,000 210,000 (20,000) 190,000 32,400 90,000 10,000 130,000 60,000 250,000
(2)
5,700 62,700
(3)150,000 62,700
(4) 42,000
572,400
1,596,400
6-59
P6-39 (continued) Item Accum. Depreciation Accounts Payable Other Payables Bonds Payable Bond Premium Common Stock Foster Company Block Corporation Additional Paid-In Capital Retained Earnings, from above Noncontrolling Interest Credits Foster Co. 155,000 63,000 95,000 250,000 210,000 110,000 315,000 190,000 212,700 36,200 (2) 3,700 (3) 20,000 (4) 1,800 304,700 Block Corp. 75,000 35,000 20,000 200,000 2,400 50,000 (3) 50,000 Eliminations Debit Credit (4) 27,000 Consolidated 257,000 98,000 115,000 450,000 2,400 210,000 110,000 328,500
1,198,000
572,400
304,700
25,500 1,596,400
6-60
P6-40 Comprehensive Problem: Intercorporate Transfers a. Computation of differential as of January 1, 20X8: Original differential at December 31, 20X1 Less: Portion written off for sale of inventory Remaining differential, January 1, 20X8 b. Verification of balance in Investment in Schmid Stock account: Schmid retained earnings, January 1, 20X8 Schmid net income, 20X8: Sales Cost of goods sold Depreciation and amortization Other expenses Other income (loss) Net income Schmid dividends, 20X8 Schmid retained earnings, December 31, 20X8 Schmid stockholders' equity: Common stock Additional paid-in capital Retained earnings, December 31, 20X8 Stockholders' equity, December 31, 20X8 Rossman's ownership share Book value of shares held by Rossman Remaining differential at January 1, 20X8 ($120,000 x .75) Balance in Investment in Schmid Stock account, December 31, 20X8 $1,400,000 $985,000 (525,000) (88,000) (227,000) (35,000) $ 150,000 (30,000) $ 120,000
110,000 (20,000) $1,490,000 $1,000,000 1,350,000 1,490,000 $3,840,000 x .75 $2,880,000 90,000 $2,970,000
c.
Elimination entries: E(1) Income from Subsidiary Dividends Declared Investment in Schmid Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $36,500 = [$110,000 + $40,000 - ($40,000 / 10)] x .25 82,500 15,000 67,500
E(2)
36,500
5,000 31,500
6-61
P6-40 (continued) E(3) Common Stock Schmid Additional Paid-In Capital Retained Earnings, January 1 Differential Investment in Schmid Stock Noncontrolling Interest Eliminate beginning investment balance: $2,902,500 = $2,970,000 - $67,500 $967,500 = ($1,000,000 + $1,350,000 + $1,400,000 + $120,000) x .25 Land Goodwill Differential Assign differential. Retained Earnings, January 1 Land Eliminate unrealized gain on land. Buildings and Equipment Depreciation and Amortization Accumulated Depreciation Other Income (Loss on Sale of Equipment) Eliminate unrealized loss on equipment: $185,000 = $435,000 - $250,000 $4,000 = ($435,000 / 15) - ($250,000 / 10) $149,000 = [($435,000 / 15) x 5] + $4,000 $40,000 = $290,000 - $250,000 Other Income Other Expenses Eliminate intercompany sale of services. Current Payables Current Receivables Eliminate intercompany receivable/payable. Current Payables Current Receivables Eliminate intercompany dividend owed: $5,000 x .75 1,000,000 1,350,000 1,400,000 120,000
2,902,500 967,500
E(4)
56,000 64,000
120,000
E(5)
23,000
23,000
E(6)
185,000 4,000
149,000 40,000
E(7)
80,000
80,000
E(8)
20,000
20,000
E(9)
3,750
3,750
6-62
P6-40 (continued) d. Rossman Corporation and Schmid Distributors Inc. Consolidation Workpaper December 31, 20X8 Item Sales Income from Subsidiary Other Income (Loss) Credits Cost of Goods Sold Depreciation and Amortization Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Retained Earnings, Jan. 1 Income, from above Dividends Declared Retained Earnings, Dec. 31, carry forward Rossman 4,801,000 82,500 90,000 4,973,500 2,193,000 Schmid 985,000 (35,000) 950,000 525,000 (1) (7) Eliminations Debit Credit 82,500 80,000 Consolidated 5,786,000 (6) 40,000 15,000 5,801,000 2,718,000 294,000 1,528,000 (4,540,000) 1,261,000 (36,500) 1,224,500
202,000 88,000 1,381,000 227,000 (3,776,000) (840,000)
(6)
4,000
(7) 80,000
1,197,500
110,000
(2)
36,500 203,000
120,000
1,497,800 1,400,000 1,197,500 110,000 2,695,300 1,510,000 (50,000) (20,000) 2,645,300 1,490,000
(3)1,400,000 (5) 23,000 203,000
120,000 (1) 15,000 (2) 5,000
1,474,800 1,224,500 2,699,300 (50,000) 2,649,300
1,626,000
140,000
6-63
P6-40 (continued) Item Cash Current Receivables Inventory Investment in Schmid Stock Land Buildings and Equipment Goodwill Differential Debits Accumulated Depreciation Current Payables Bonds Payable Common Stock Rossman Corporation Schmid Distributors Additional Paid-In Capital Retained Earnings, from above Noncontrolling Interest Credits Rossman 50,700 101,800 286,000 2,970,000 400,000 1,200,000 2,400,000 2,990,000 6,208,500 4,536,300 1,105,000 86,200 1,000,000 100,000 420,000 76,300 200,000 1,000,000 (4) 56,000 Schmid 38,000 89,400 218,900 Eliminations Debit Credit (8) (9) 20,000 3,750 Consolidated 88,700 167,450 504,900
(1) 67,500 (3)2,902,500 (5) 23,000
1,633,000 5,575,000 64,000 8,033,050 1,674,000 138,750 1,200,000 100,000 1,272,000
(6) 185,000 (4) 64,000 (3) 120,000
(4)
120,000
(8) (9)
20,000 3,750
(6) 149,000
(3)1,000,000 (3)1,350,000 1,626,000 4,424,750 140,000 (2) 31,500 (3) 967,500 4,424,750
1,272,000 1,350,000 2,645,300 1,490,000 6,208,500 4,536,300
2,649,300 999,000 8,033,050
6-64
P6-41A Fully Adjusted Equity Method a. Adjusted trial balance: Item Cash and Accounts Receivable Inventory Land Buildings and Equipment Investment in Lane Company Stock Cost of Goods Sold Depreciation and Amortization Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Subsidiary Total Prime Company Debit Credit $ 151,000 240,000 100,000 500,000 216,000 160,000 25,000 20,000 60,000 Lane Company Debit Credit $ 55,000 100,000 80,000 150,000 80,000 15,000 10,000 35,000
$ 230,000 60,000 200,000 300,000 394,000 250,000 38,000 $1,472,000 $1,472,000
$ 60,000 25,000 50,000 100,000 140,000 150,000 $525,000
$525,000
b.
Journal entries recorded by Prime Company: (1) Cash Investment in Lane Company Stock Record dividend from Lane Company: $35,000 x .80 Investment in Lane Company Stock Income from Subsidiary Record equity-method income: $45,000 x .80 Investment in Lane Company Stock Income from Subsidiary Recognize portion of gain on sale of equipment: $20,000 / 10 years 28,000 28,000
(2)
36,000
36,000
(3)
2,000
2,000
6-65
P6-41A (continued) c. Eliminating entries, December 31, 20X7: E(1) Income from Subsidiary Dividends Declared Investment in Lane Company Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $9,000 = $45,000 x .20 Common Stock Lane Company Retained Earnings, January 1 Differential Investment in Lane Company Stock Noncontrolling Interest Eliminate beginning investment balance: $50,000 = ($160,000 + $40,000) ($50,000 + $100,000) $232,000 = $240,000 - $8,000 $58,000 = ($100,000 + $140,000 + $50,000) x .20 Goodwill Retained Earnings, January 1 Noncontrolling Interest Differential Assign differential to goodwill. Investment in Lane Company Stock Noncontrolling Interest Land Eliminate unrealized profit on land. Buildings and Equipment Investment in Lane Company Stock Depreciation and Amortization Expense Accumulated Depreciation Eliminate unrealized profit on equipment. 38,000 28,000 10,000
E(2)
9,000
7,000 2,000
E(3)
100,000 140,000 50,000
232,000 58,000
E(4)
25,000 20,000 5,000
50,000
E(5)
8,000 2,000
10,000
E(6)
5,000 18,000
2,000 21,000
Accumulated depreciation adjustment: Required balance ($5,000 x 7 years) Balance recorded ($7,000 x 2 years) Required increase E(7) Accounts Payable Accounts Receivable Eliminate intercorporate receivable/payable.
$35,000 (14,000) $21,000 4,000 4,000
6-66
6-67
P6-41A (continued) d. Prime Company and Lane Company Consolidation Workpaper December 31, 20X7 Item Sales Income from Subsidiary Credits Cost of Goods Sold Deprec. and Amortization Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash and Receivables Inventory Land Buildings and Equipment Investment in Lane Company Stock Differential Goodwill Debits Accum. Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings, from above Noncontrolling Interest Credits Prime Company Lane Company Eliminations Debit Credit (1) 38,000 (6) 2,000 Consolidated 400,000 400,000 240,000 38,000 30,000 (308,000) 92,000 (9,000) 83,000 374,000 2,000 (1) (2) 207,000 (7) (6) 5,000 (5) 28,000 7,000 37,000 4,000 10,000 83,000 457,000 (60,000) 397,000 202,000 340,000 170,000 655,000
250,000 150,000 38,000 288,000 150,000 160,000 80,000 25,000 15,000 20,000 10,000 (205,000) (105,000)
83,000 394,000 83,000 477,000 (60,000) 417,000 151,000 240,000 100,000 500,000 216,000
45,000 140,000 45,000 185,000 (35,000) 150,000 55,000 100,000 80,000 150,000
(2)
9,000 47,000
2,000
(3) 140,000 (4) 20,000 47,000
1,207,000 230,000 60,000 200,000 300,000 417,000 1,207,000
385,000 60,000 25,000 50,000 100,000 150,000 385,000
(5) 8,000 (6) 18,000 (3) 50,000 (4) 25,000
(1) 10,000 (3) 232,000 (4) 50,000
25,000 1,392,000 311,000 81,000 250,000 300,000 397,000 53,000 1,392,000
(7)
4,000
(6) 21,000
(3)100,000 (4) (5) 207,000 5,000 2,000 424,000 37,000 (2) 2,000 (3) 58,000 424,000
6-68
P6-42A Cost Method a. Journal entry recorded by Prime Company: Cash Dividend Income Record dividend from Lane Company. b. Eliminating entries, December 31, 20X7: E(1) Dividend Income Dividends Declared Eliminate dividend income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $9,000 = $45,000 x .20 Common Stock Lane Company Retained Earnings, January 1 Differential Investment in Lane Company Stock Noncontrolling Interest Eliminate investment balance at date of acquisition: $50,000 = ($160,000 + $40,000) ($100,000 + $50,000) $40,000 = ($100,000 + $50,000 + $50,000) x .20 Retained Earnings, January 1 Noncontrolling Interest Assign undistributed prior earnings of subsidiary to noncontrolling interest: ($140,000 - $50,000) x .20 Goodwill Retained Earnings, January 1 Noncontrolling Interest Differential Assign differential at beginning of period. 28,000 28,000 28,000 28,000
E(2)
9,000
7,000 2,000
E(3)
100,000 50,000 50,000
160,000 40,000
E(4)
18,000
18,000
E(5)
25,000 20,000 5,000
50,000
6-69
P6-42A (continued) E(6) Retained Earnings, January 1 Noncontrolling Interest Land Eliminate unrealized profit on land. Buildings and Equipment Retained Earnings, January 1 Depreciation and Amortization Expense Accumulated Depreciation Eliminate unrealized profit on equipment. Accounts Payable Accounts Receivable Eliminate intercorporate receivable/payable. 8,000 2,000
10,000
E(7)
5,000 18,000
2,000 21,000
E(8)
4,000
4,000
6-70
P6-42A (continued) c. Prime Company and Lane Company Consolidation Workpaper December 31, 20X7 Item Sales Dividend Income Credits Cost of Goods Sold Deprec. and Amortization Other Expenses Debits Consolidated Net Income Income to Noncontrolling Interest Income, carry forward Ret. Earnings, Jan. 1 Prime Company Lane Company Eliminations Debit Credit (1) 28,000 (7) 2,000 Consolidated 400,000 400,000 240,000 38,000 30,000 (308,000) 92,000 (9,000) 83,000
250,000 150,000 28,000 278,000 150,000 160,000 80,000 25,000 15,000 20,000 10,000 (205,000) (105,000)
73,000 348,000
45,000 140,000
(2) (3) (4) (5) (6) (7)
9,000 37,000 50,000 18,000 20,000 8,000 18,000 37,000
2,000
Income, from above Dividends Declared Ret. Earnings, Dec. 31, carry forward Cash and Receivables Inventory Land Buildings and Equipment Investment in Lane Company Stock Differential Goodwill Debits Accum. Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings, from above Noncontrolling Interest Credits
73,000 421,000 (60,000) 361,000 151,000 240,000 100,000 500,000 160,000 1,151,000 230,000 60,000 200,000 300,000 361,000
45,000 185,000 (35,000) 150,000 55,000 100,000 80,000 150,000
2,000 (1) 28,000 (2) 7,000
374,000 83,000 457,000 (60,000) 397,000 202,000 340,000 170,000 655,000
151,000 (8) (7) 5,000
37,000 4,000
(6) 10,000 (3)160,000 (5) 50,000
385,000 60,000 25,000 50,000 100,000 150,000
(3) 50,000 (5) 25,000
25,000 1,392,000 311,000 81,000 250,000 300,000 397,000 53,000 1,392,000
(8)
4,000
(7) 21,000
(3)100,000 (5) (6) 151,000 5,000 2,000 342,000 37,000 (2) 2,000 (3) 40,000 (4) 18,000 342,000
1,151,000
385,000
6-71

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Chapter 06 - Intercompany Transfers of Services And Noncurrent Assets

Chapter 06 - Intercompany Transfers of Services And Noncurrent Assets

Chapter 06 - Intercompany Transfers of Services And Noncurrent Assets

Chapter 06 - Intercompany Transfers of Services And Noncurrent Assets

Chapter 06 - Intercompany Transfers of Services And Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

$18,000 (4,000) $14,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

$210,000 (180,000) $ 30,000

$150,000 (35,000) $115,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

$245,000 (210,000) $ 35,000 $120,000 (35,000) $ 85,000

$150,000 (70,000) $ 80,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

(17,500) $10,500 $4,000 (28,000) $ 1,500 $15,000 (4,000) $11,000

$10,500 (1,500) $ 9,000 $20,000 (12,000) $ 8,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

20X4 $ 90,000 35,000 $125,000 (8,750) $116,250

20X5 $110,000 40,000 $150,000 (10,000) $140,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

124,000 25,200 10,800

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

$ 27,000 3,000 2,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

$ 36,000 (30,000) $ 6,000 $150,000 30,000 $180,000 (36,000) $144,000

90,000 37,800 16,200

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

9,900 $43,900 $34,000

$19,000 ( 1,000) $18,000 x .90

16,200 (7,000) $43,200

(420,000) $ 44,000 10 $4,400

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

P6-28 Multiple-Choice Questions 1. d 2. c 3. a 4. a 5. d

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

7,200 2,200 $449,000

24,000 (2,800) (14,000) $477,200 (12,800) (15,400) $449,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

(2) 10,000 (3) 9,000

(1)100,000 (2) 4,000 284,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

$ 50,000 (26,000) $ 24,000 $ 21,000 (6,000) $ 15,000

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets

Chapter 06 - Intercorporate Transfers of Services and Noncurrent Assets