Exam 6: Intercompany Profit Transactions - Plant Assets

Snow Company is a wholly owned subsidiary of Penguin Corporation.On January 1,2011,Penguin transferred equipment to Snow for $195,000.The equipment had originally cost $250,000,but at the time of transfer,had a $180,000 book value and a five year remaining life.Both companies use the straight-line method of depreciation and assume no salvage value for the equipment. Required: Prepare the consolidation worksheet entries for this asset on the following dates: 1.December 31,2011 2.December 31,2012 3.December 31,2013

Plenny Corporation sold equipment to its 90%-owned subsidiary,Sourdough Corp.,on January 1,2014.Plenny sold the equipment for $100,000 when its book value was $75,000 and it had a 5-year remaining useful life with no expected salvage value.Straight-line depreciation is used by both companies.Separate balance sheets for Plenny and Sourdough included the following equipment and accumulated depreciation amounts on December 31,2014: Consolidated amounts for equipment and accumulated depreciation at December 31,2014 were respectively

Use the following information to answer the question(s) below. On January 1, 2012, Shrimp Corporation purchased a delivery truck with an expected useful life of five years, and a salvage value of $8,000. On January 1, 2014, 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, 2014, Shrimp recorded the following journal entry: -The noncontrolling interest share for 2014 was

Use the following information to answer the question(s) below. On January 1, 2012, Shrimp Corporation purchased a delivery truck with an expected useful life of five years, and a salvage value of $8,000. On January 1, 2014, 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, 2014, Shrimp recorded the following journal entry: -In preparing the consolidated financial statements for 2014,the elimination entry for depreciation expense was a

Palmer Corporation purchased 75% of Stone Industries' common stock on January 2,2012.On January 1,2013,Stone sold equipment to Palmer that had a net book value of $16,000 and an original cost of $24,000 for $20,000.On January 1,2013,Palmer sold a building to Stone that had a net book value of $200,000 and an original cost of $250,000 for $300,000.The equipment had a remaining useful life of 8 years,and the building had a remaining useful life of 20 years.Neither asset had salvage value.Both companies use straight-line depreciation. Selected account balances are shown below for Palmer and Stone for the year ended December 31,2013: Required: 1.Prepare the consolidating working paper entries relating to the equipment and building for the year ended December 31,2013. 2.Calculate the following balances for the year ended December 31,2013: A.Consolidated "Other Expenses" B.Consolidated Buildings C.Consolidated Equipment D.Noncontrolling interest in Stone's net income

Porter Corporation acquired 70% of the outstanding voting common stock of Sherman Inc.in 2008.On January 1,2009,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 2011.On January 2,2012,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 2012,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 31,2012. 2.How much depreciation expense relating to the transferred asset did Porter record in 2012 on the company's separate books? 3.How much depreciation expense relating to the transferred asset was reported on the consolidated income statement in 2012? 4.What amounts were reported for the Machine and the Accumulated Depreciation in the consolidated balance sheet on December 31,2012?

Pollek Corporation paid $16,200 for a 90% interest in Swamp Corporation on January 1,2013,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 2013,Pollek's sales to Swamp were $4,800,of which half of the merchandise remained in Swamp's inventory at December 31,2013.(The 2013 ending inventory was sold in 2014.)During 2014,Pollek's sales to Swamp were $6,000 of which 60% remained in Swamp's inventory at December 31,2014.At year-end 2014,Swamp owed Pollek $1,500 for the inventory purchased during 2014. 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 1,2014 for $2,800.Straight-line depreciation is used. 3.Separate company financial statements for Pollek Corporation and Subsidiary at December 31,2014 are summarized in the first two columns of the consolidation working papers. 4.The following information is available for 2013: Required: Complete the working papers to consolidate the financial statements of Pollek Corporation and subsidiary for the year ended December 31,2014.

Use the following information to answer the question(s) below. On January 1, 2012, Shrimp Corporation purchased a delivery truck with an expected useful life of five years, and a salvage value of $8,000. On January 1, 2014, 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, 2014, Shrimp recorded the following journal entry: -Controlling interest share in consolidated net income for 2014 was

Use the following information to answer the question(s) below. On December 31, 2014, 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 31,2014 for the intercompany sale will include a

Gain on the sale of land between affiliates should not appear in the consolidated income statement.