Exam 6: Intercompany Profit Transactions - Plant Assets

Pigeon Corporation purchased land from its 60%-owned subsidiary,Seed Inc. ,in 2010 at a cost $50,000 greater than Seed's book value.In 2012,Pigeon sold the land to an outside entity for $20,000 more than Pigeon's book value.The 2012 consolidated income statement should report a gain on the sale of land of

Use the following information to answer the question(s)below. On January 1,2010,Shrimp Corporation purchased a delivery truck with an expected useful life of five years,and a salvage value of $8,000.On January 1,2012,Shrimp sold the truck to Pacet Corporation.Pacet assumed the same salvage value and remaining life of three years used by Shrimp.Straight-line depreciation is used by both companies.On January 1,2012,Shrimp recorded the following journal entry: Pacet holds 60% of Shrimp.Shrimp reported net income of $55,000 in 2012 and Pacet's separate net income (excludes interest in Shrimp)for 2012 was $98,000. -Controlling interest share in consolidated net income for 2012 was

Use the following information to answer the question(s)below. On January 1,2010,Shrimp Corporation purchased a delivery truck with an expected useful life of five years,and a salvage value of $8,000.On January 1,2012,Shrimp sold the truck to Pacet Corporation.Pacet assumed the same salvage value and remaining life of three years used by Shrimp.Straight-line depreciation is used by both companies.On January 1,2012,Shrimp recorded the following journal entry: Pacet holds 60% of Shrimp.Shrimp reported net income of $55,000 in 2012 and Pacet's separate net income (excludes interest in Shrimp)for 2012 was $98,000. -In the eliminating/adjusting entries on consolidation working papers for 2012,the Truck account was

Petrol Company acquired an 90% interest in Seadig Corporation on January 1,2010.On January 1,2011,Seadig sold a building with a book value of $120,000 to Petrol for $150,000.The building had a remaining useful life of ten years and no salvage value.Straight-line depreciation is used.The separate balance sheets of Petrol and Seadig on December 31,2011 included the following balances: The consolidated amounts for Buildings and Accumulated Depreciation - Buildings that appeared,respectively,on the balance sheet at December 31,2011,were

On January 1,2011,Bigg Corporation sold equipment with a book value of $20,000 and a 10-year remaining useful life to its wholly-owned subsidiary,Little Corporation,for $30,000.Both Bigg and Little use the straight-line depreciation method,assuming no salvage value.On December 31,2011,the separate company financial statements held the following balances associated with the equipment: A working paper entry to consolidate the financial statements of Bigg and Little on December 31,2011 included a

Use the following information to answer the question(s)below. On December 31,2011,Pinne Corporation sold equipment with a three-year remaining useful life and a book value of $21,000 to its 70%-owned subsidiary,Sull Company,for a price of $27,000.Pinne bought the equipment four years ago for $49,000.The salvage value is zero.Straight-line depreciation is used by both companies. -An elimination entry at December 31,2011 for the intercompany sale will include a

On January 1,2012 Saffron Co.recorded a $40,000 profit on the upstream sale of some equipment that had a remaining four-year life under the straight-line depreciation method.The equipment has no salvage value.Saffron had separate income of $100,000 in 2012.The parent company,Pommel Incorporated,owns 90% of Saffron.Pommel would report investment income from Saffron in 2012 of

Which of the following is correct?

On January 1,2011,Pilgrim Imaging purchased 90% of the outstanding common stock of Snapshot Productions for $585,000 cash.The remaining 10% of Snapshot had an assessed fair value of $65,000 at that time.Snapshot had equipment that was undervalued on their books by $50,000,and an unrecorded patent with a fair value of $15,000.The equipment had five years remaining to its useful life,and the patent had 10 years remaining to its useful life. On January 1,2012,Pilgrim sold Snapshot a building for $100,000 that had originally cost $140,000.The book value was $60,000 at the date of transfer,and had a five-year remaining life at the date of transfer.Straight-line depreciation is used with no salvage value.Several line items from the companies' separate December 31,2012 trial balances are shown below. Required: Determine consolidated balances for each of the accounts listed as of December 31,2012.

Separate income statements of Plantation Corporation and its 90%-owned subsidiary,Savannah Corporation,for 2011 are as follows,prior to Plantation recording any income related to its subsidiary: Additional information: 1.Plantation acquired its 90% interest in Savannah Corporation when the book values were equal to the fair values. 2.The gain on equipment relates to equipment with a book value of $95,000 and a 7-year remaining useful life that Plantation sold to Savannah for $130,000 on January 1,2011.The straight-line depreciation method was used and the equipment has no salvage value. 3.On January 1,2011,Savannah sold land to an outside entity for $90,000.The land was acquired from Plantation in 2009 for $70,000.The original cost of the land to Plantation was $45,000. 4.Savannah did not declare or distribute dividends in 2011. Required: 1.Prepare elimination/adjusting entries on the consolidated worksheet for the year 2011. 2.Prepare the consolidated income statement for the year ended December 31,2011.

Use the following information to answer the question(s)below. On January 1,2010,Shrimp Corporation purchased a delivery truck with an expected useful life of five years,and a salvage value of $8,000.On January 1,2012,Shrimp sold the truck to Pacet Corporation.Pacet assumed the same salvage value and remaining life of three years used by Shrimp.Straight-line depreciation is used by both companies.On January 1,2012,Shrimp recorded the following journal entry: Pacet holds 60% of Shrimp.Shrimp reported net income of $55,000 in 2012 and Pacet's separate net income (excludes interest in Shrimp)for 2012 was $98,000. -Parrot Company owns all the outstanding voting stock of Southern Manufacturing.On January 1,2012,Parrot sold machinery to Southern at its book value of $24,000.Parrot had the machinery three years before selling it and used an eight-year straight-line depreciation method,with zero salvage value.Southern will use the straight-line depreciation method,and assumes the machine has five years remaining and no salvage value.In the 2012 consolidating working papers,the depreciation expense

Pigeon Company owns 80% of the outstanding stock of Spiniflex Corporation,which was purchased on January 1,2006,when Spiniflex's book values were equal to its fair values.The amount paid by Pigeon included $16,000 for goodwill. On January 1,2007,Pigeon purchased a truck for $40,000 which had no salvage value with a useful life of 8 years,depreciated on a straight-line basis.On January 1,2012,Pigeon sold the truck to Spiniflex Corporation for $18,000.The truck was estimated to have a three-year remaining life on this date and no salvage value.All affiliates use the straight-line depreciation method. Required: Prepare all relevant entries with respect to the truck. 1.Record the journal entries on Pigeon's books for 2012. 2.Record the journal entries on Spiniflex's books for 2012. 3.Prepare the consolidation entries required for Pigeon and subsidiary for 2012 as a result of this transaction.

Porter Corporation acquired 70% of the outstanding voting common stock of Sherman Inc.in 2004.On January 1,2005,Sherman Inc.purchased a depreciable machine for $120,000 cash with an estimated useful life of 10 years that was depreciated on a straight-line basis.The machine has no estimated salvage value.Sherman used the machine until the end of 2007.On January 2,2008,Sherman sold the machine to Porter who continued to use the same estimated life (seven years remaining),salvage value and depreciation method that was used by Sherman.At the end of 2008,Sherman reported a gain on sale of the machine of $14,000. Required: Answer the following questions concerning Porter and Sherman. 1.Prepare elimination/adjusting entries for the consolidated working papers for the year ended December 31,2008. 2.How much depreciation expense relating to the transferred asset did Porter record in 2008 on the company's separate books? 3.How much depreciation expense relating to the transferred asset was reported on the consolidated income statement in 2008? 4.What amounts were reported for the Machine and the Accumulated Depreciation in the consolidated balance sheet on December 31,2008?

Use the following information to answer the question(s)below. On January 1,2010,Shrimp Corporation purchased a delivery truck with an expected useful life of five years,and a salvage value of $8,000.On January 1,2012,Shrimp sold the truck to Pacet Corporation.Pacet assumed the same salvage value and remaining life of three years used by Shrimp.Straight-line depreciation is used by both companies.On January 1,2012,Shrimp recorded the following journal entry: Pacet holds 60% of Shrimp.Shrimp reported net income of $55,000 in 2012 and Pacet's separate net income (excludes interest in Shrimp)for 2012 was $98,000. -Assume an upstream sale of machinery occurs on January 1,2011.The parent owns 70% of the subsidiary.There is a gain on the intercompany transfer and the machine has five remaining years of useful life and no salvage value.Straight-line depreciation is used.Which of the following statements is correct?

Pied Imperial Corporation acquired a 90% interest in Somest Corporation in 2009 when Somest's book values were equivalent to fair values.Somest sold equipment with a book value of $80,000 to Pied for $130,000 on January 1,2011.Pied is fully depreciating the equipment over a 4-year period by using the straight-line method.Somest reported net income for 2011 was $320,000.Pied's 2011 income from Somest was

Pollek Corporation paid $16,200 for a 90% interest in Swamp Corporation on January 1,2011,when Swamp stockholders' equity consisted of $10,000 Capital Stock and $3,000 of Retained Earnings.The excess cost over book value was attributable to goodwill. Additional information: 1.Pollek sells merchandise to Swamp at 120% of Pollek's cost.During 2011,Pollek's sales to Swamp were $4,800,of which half of the merchandise remained in Swamp's inventory at December 31,2011.(The 2011 ending inventory was sold in 2012. )During 2012,Pollek's sales to Swamp were $6,000 of which 60% remained in Swamp's inventory at December 31,2012.At year-end 2012,Swamp owed Pollek $1,500 for the inventory purchased during 2012. 2.Pollek Corporation sold equipment with a book value of $2,000 and a remaining useful life of four years and no salvage value to Swamp Corporation on January 1,2012 for $2,800.Straight-line depreciation is used. 3.Separate company financial statements for Pollek Corporation and Subsidiary at December 31,2012 are summarized in the first two columns of the consolidation working papers. 4.The following information is available for 2011: Required: Complete the working papers to consolidate the financial statements of Pollek Corporation and subsidiary for the year ended December 31,2012.

Plower Corporation acquired all of the outstanding voting common stock of the Squab Corporation several years ago when the book values and fair values of Squab's net assets were equal. On April 1,2010,Plower sold land that cost $25,000 to Squab for $40,000.Squab resold the land for $45,000 on December 1,2012. On July 1,2012,Plower sold equipment with a book value of $10,000 to Squab for $26,000.Squab is depreciating the equipment over a four-year period using the straight-line method.The equipment has no salvage value. Required: The first two columns in the working papers presented below summarize income statement information from the separate company financial statements of Plower and Squab for the year ended December 31,2012.Fill in the consolidated working paper columns to show how each of the items from the separate company reports will appear in the consolidated income statement for the year ended December 31,2012.

Parrot Corporation acquired a 70% interest in Swifti Corp.on January 1,2010,when Swifti's book values and fair values were equivalent.On January 1,2011,Swifti sold a building with a book value of $60,000 to Parrot for $80,000.The building had a remaining life of five years,no salvage value,and was depreciated by the straight-line method.Swifti reported net income of $200,000 for 2011.What was the noncontrolling interest share for 2011?

Several years ago,Pilot International purchased 70% of the outstanding stock of Skyway Incorporated,at a time when Skyway's book values were equal to its fair values.On January 1,2009,Skyway purchased a truck for $80,000 which had no salvage value with a useful life of 8 years,depreciated on a straight-line basis.On January 1,2012,Skyway sold the truck to Pilot Corporation for $28,000.The truck was estimated to have a five-year remaining life on this date,and no salvage value.All affiliates use the straight-line depreciation method. Required: Prepare all relevant entries with respect to the truck. 1.Record the journal entries on Pilot's books for 2012. 2.Record the journal entries on Skyway's books for 2012. 3.Prepare the consolidation entries required for Pilot and subsidiary for 2012 as a result of this transaction.

After eliminating/adjusting entries are prepared,what was the intercompany sale impact on the consolidated financial statements for the year ended December 31,2011?