Question

On January 1, 2020, Pioneer Company purchased 80% of the common stock of Shipley Company for...

On January 1, 2020, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. On this date, Shipley’s stockholders’ equity consisted of the following: Common stock $220,000 Other contributed capital 90,000 Retained earnings 320,000 Any difference between implied and book value relates to goodwill. After the acquisition, during 2020, Pioneer sold $100,000 of land to Shipley for cash. The cost of the land was $60,000 at the date of the transfer. Also at January 2, 2020, Pioneer transferred equipment to Shipley for $18,000 cash. The equipment originally cost $20,000 and has a book value of $15,000 (three-year remaining useful life). During 2021, Shipley sold the land to a third-party for $140,000. The equipment continued to be used by Shipley.

Instructions:

A. Prepare the 2020 journal entries only relating to land and equipment transactions.

B. Prepare the 2020 consolidation worksheet entries only relating to the land and equipment transactions.

C. Prepare the 2021 journal entries only relating to land sale and equipment transactions.

D. Prepare the 2021 consolidation worksheet entries only relating to the land and equipment transactions.

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