Question
Plumber Corporation owns 60 percent of Socket Corporation’s voting common stock. On December 31, 20X4, Plumber...
Plumber Corporation owns 60 percent of Socket Corporation’s
voting common stock. On December 31, 20X4, Plumber paid Socket
$324,000 for dump trucks Socket had purchased on January 1, 20X2.
Both companies use straight-line depreciation. The consolidation
entry included in preparing consolidated financial statements at
December 31, 20X4, was
| Consolidation Worksheet Entry | Debit | Credit | ||||
| Trucks | 36,000 | |||||
| Gain on Sale of Trucks | 36,000 | |||||
| Accumulated Depreciation | 72,000 | |||||
Required:
a. What amount did Socket pay to purchase the trucks on January 1,
20X2?
b. What was the economic life of the trucks on January 1, 20X2?
c. Prepare the worksheet consolidation entry needed in preparing
the consolidated financial statements at December 31, 20X5.
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