Question

On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for...

On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life.Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively.

17.        What was the amount of the gain or loss on the sale of equipment reported by Republic on its pre-consolidation income statement in 2020?

a. $-0-

b. $ 5,000 gain

c.    $20,000 loss

d. $35,000 gain

18.       What was the amount of the credit to depreciation expense on the 2021 consolidation worksheet?

a. $   750

b.   $-0-

c.   $1,000

d.   $1,600

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

17. Sale value of asset as on 1st April 2020 = $40000

Book Value of the asset as on 1st April 2020 = original cost (to Republic) of $60,000 less accumulated depreciation of $25,000 = $35000

Gain on the sale of equipment = $40000-$35000 = $ 5000 gain

Option (b) is correct answer.

18. Credit to depreciation expenses will be zero Because the sale is done to wholly owned subsidiary. There will not be any change in the consolidated worksheet of Republic company in the value of the Assets sold and accumulated depreciation.

Option (b) is correct answer.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life. Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively. 17. What...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life. Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively. Assume Republic...
Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1,...
Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2020, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2020, 2021, and 2022, respectively. Parker sold the land purchased from Stark for $92,000 in 2022. Both companies use the equity method of accounting. Which of the following will be included in a consolidation entry for 2021? A. Debit RE for 5,000 B. Credit RE...
On January 1, 2011, Matin Inc. (a wholly-owned subsidiary) sold equipment to Musial Corp. for $168,000...
On January 1, 2011, Matin Inc. (a wholly-owned subsidiary) sold equipment to Musial Corp. for $168,000 in cash. The equipment originally cost $140,000 but had a book value of only $98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method. Musial earned $308,000 in net income in 2011 (including investment income) while Matin reported $126,000. Assume there is no amortization related to the original investment. Musial Corp. sold inventory...
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 30%...
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 30% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. 2020 2021 2022 Purchases by Philbin $ 8,000 $ 12,000 $ 15,000 Ending inventory on Philbin’s books 3,000 7,000 3,000 Assume the equity method is used. The following data are available pertaining to Anderson’s income and dividends. 2020 2021 2022 Anderson’s...
On January 1, 2016, Pulte sold a building to its wholly-owned subsidiary, Scott, for $2,614,000. On...
On January 1, 2016, Pulte sold a building to its wholly-owned subsidiary, Scott, for $2,614,000. On that date, Pulte carried the building on its books at an original cost of $840,000 and accumulated depreciation of $257,000. Pulte had estimated 5 years total useful life for the building, and was depreciating it on a straight-line basis with $198,000 estimated salvage value. What net book value for this building should be reported on Pulte's consolidated balance sheet as of 12/31/2016?
On January 1, 2016, Pulte sold a building to its wholly owned subsidiary, Scott, for $2,114,104....
On January 1, 2016, Pulte sold a building to its wholly owned subsidiary, Scott, for $2,114,104. On that date, Pulte carried the building on its books at an original cost of $879,661 and accumulated depreciation of $259,196. Pulte had estimated 6 years total useful life for the building, and was depreciating it on a straight-line basis with $190,785 estimated salvage value. What net book value for this building should be reported on Pulte's consolidated balance sheet as of 12/31/2016?
On January 1, 2012, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with...
On January 1, 2012, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash. At the date of transfer, Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported net income of $28,000 and $32,000 for 2012 and 2013, respectively. All net income effects of the intra-entity transfer are...
(a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd,...
(a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Required (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the...
Downstream Intercompany Equipment Transactions On July 1, 2018, Pearl Industries sold administrative equipment with a book...
Downstream Intercompany Equipment Transactions On July 1, 2018, Pearl Industries sold administrative equipment with a book value of $1,000,000 to its subsidiary, Shiek Shoes, for $800,000. At the date of sale, the equipment had a remaining life of five years. It is being straight-line depreciated on Shiek’s books. It is now December 31, 2020, the end of the accounting year, and you are preparing the working paper to consolidate the trial balances of Pearl and Shiek. Shiek still owns the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT