Question

Grey Corp owns 86% of Blue Company. On January 1, 2017 Grey sold Blue a machine...

Grey Corp owns 86% of Blue Company. On January 1, 2017 Grey sold Blue a machine for $97,261. Immediately prior to the sale, the machine was recorded on Grey's books at a net book value of $24,609. Prior to the sale, Grey was depreciating the machine on a straight-line basis with 2 years of remaining life and no salvage value. Blue plans to adopt the same depreciation assumptions as Grey. What elimination adjustments with respect to this sale must be made to consolidated net income in 2017(ignoring income tax effects)? (Note: use a minus sign in your answer to denote a decrease, no sign needed for an increase.)

Homework Answers

Answer #1

Pass following Journal in the respective books of Accounts

In the Books Of Gray Crop:

Bank A/C .....................Dr 97261

To Macine 24609

To Profit on Sale 72652

In The Books of Blue Crop:

Machine A/c ...........Dr 97261

To Bank 97261

In Consolidated Financial Statement:

Profit & loss A/c .....dr 72652

To Machine 72652

Machine A/c ............DR 36326

To Depreciation on Machine A/c 36326

(Being excess depreciation being reversed in consolodating process)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey sold Blue a machine...
Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey sold Blue a machine for $62,261. Immediately prior to the sale, the machine was recorded on Grey's books at a net book value of $28,583. Prior to the sale, Grey was depreciating the machine on a straight-line basis with 2 years of remaining life and no salvage value. Blue plans to adopt the same depreciation assumptions as Grey. What elimination adjustments with respect to this sale must be...
Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2017, Dunn sold...
Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2017, Dunn sold to Grey $50,050 of machinery with a carrying amount of $37,750. Grey is depreciating the acquired machinery over a five-year remaining life by the straight-line method. The net adjustments to compute 2017 and 2018 consolidated net income would be an increase (decrease) of
On January 1, Poe Corp. sold a machine for $4,369,577 to Saxe Corp., its wholly-owned subsidiary....
On January 1, Poe Corp. sold a machine for $4,369,577 to Saxe Corp., its wholly-owned subsidiary. Poe paid $1.1 million for this machine, which had accumulated depreciation of $250,000 on the sale date. Poe estimated a $100,000 salvage value and depreciated the machine on the straight-line basis over 20 years, a policy that Saxe continued. In Poe's December 31 consolidated balance sheet, the accumulated depreciation of this machine should be shown on the consolidated balance sheet as:
On October 1, 2017, Blue Spruce Corp., a farm equipment dealer, sold a harvesting machine to...
On October 1, 2017, Blue Spruce Corp., a farm equipment dealer, sold a harvesting machine to Coronado Industries. Instead of a cash payment, Coronado Industries gave Blue a $121,000, two-year, 10% note; 10% is a realistic rate for a note of this type. The note required interest to be paid annually on October 1, beginning October 1, 2018. Blue’s financial statements are prepared on a calendar-year basis. a)Repeat the journal entries under the assumption that Blue Spruce Corp. uses reversing...
King Corp. owns 85% of Lee Corp's common stock. During October, Lee sold merchandise to King...
King Corp. owns 85% of Lee Corp's common stock. During October, Lee sold merchandise to King for $100,000. At December 31, one-half of the merchandise remained in King's inventory. For the year, gross profit as a percentage of sales was 24% for King and 31% for Lee. Calculate the elimination adjustment to net income available to controlling interest for the year the intercompany sale occurred. Use a negative sign to indicate a decrease; no sign to indicate an increase.
Louise Corp. owned all of the voting common stock of Thelma Co. On January 1, 2017,...
Louise Corp. owned all of the voting common stock of Thelma Co. On January 1, 2017, Thelma sold a parcel of land to Louise. The land had a book value of $32,000 and was sold to Louise for $45,000. What journal entry, if any, should be recorded on the consolidation work sheet for the consolidation the operations of Louise Corp and Thelma Corp as a result of this transaction? SHOW ALL WORK IN SUPPORT OF YOUR ANSWER Chaffee Co. owned...
Assume that a parent company owns 75 percent of its subsidiary. On January 1, 2016, the...
Assume that a parent company owns 75 percent of its subsidiary. On January 1, 2016, the parent company had a $100,000 (face) 8 percent bond payable outstanding with a carrying value of $96,600. Several years ago, the bond was originally issued to an unaffiliated company for 92% of par value. On January 1, 2016, the subsidiary acquired the bond for $92,000. During 2016, the parent company reported $400,000 of (pre-consolidation) income from its own operations (prior to any equity method...
4-Assume that a Parent company owns 100% of its Subsidiary. On January 1, 2016 the Parent...
4-Assume that a Parent company owns 100% of its Subsidiary. On January 1, 2016 the Parent company had a $1,000,000 (face) bond payable outstanding with a carrying value of $1,070,000. The bond was originally issued to an unaffiliated company. On that same date, the Subsidiary acquired the bond for $996,000. During 2016, the Parent company reported $630,000 of (pre-consolidation) income from its own operations (i.e. prior to any equity method adjustments by the Parent company) and after recording interest expense....
1. Gibbon Corp., a Canadian public corporation, owns equipment for which the following year-end information is...
1. Gibbon Corp., a Canadian public corporation, owns equipment for which the following year-end information is available: Carrying amount (book value) $59,000 Recoverable amount 52,000 Fair value less disposal costs 55,000 Which of the following best describes the proper accounting treatment for Gibbon's equipment? a. It is not impaired and a loss should not be recognized. b. It is impaired and a loss must be recognized, with no reversal possible. c. It is not impaired, but a loss must be...
PART ONE: Mulan owns 90% of China. On January 1, 2016, China Company sold equipment costing...
PART ONE: Mulan owns 90% of China. On January 1, 2016, China Company sold equipment costing $100,000 to Mulan for $160,000. The equipment has a 10 year life. Both firms use straight line depreciation. During 2016, China reported $200,000 net income. Based on this information, which of the following investment entries should Palm make in 2016? $120,000 $126,000 $131,400 $180,000 PART TWO: This problem is based on information in the preceding question. Mulan owns 90% of China. On January 1,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT