Question

E 6-7 Non-depreciable asset downstream sale Vasquez SA is a 90 percent-owned subsidiary of Fernando SA. The book value of Vasquez SA was equal to fair value when Fernando SA acquired Vasquez SA. In 2013, Fernando SA sold land with a book value of $500,000 to Vasquez SA for $600,000. Vasquez SA's net income in 2013 and 2014 was $600,000 and $460,000, respectively. Vasquez SA sold the land to an outside party in 2014. cs REQUIRED 1. What is the amount of land that should be reported in the consolidated balance sheet? S22 Row much was income from Vasquez in 2013? C3. How much was income from Vasquez in 2014?

Answer 1

amount of Land that should be reported in consolidated Balane sheet in 2013 O en the Pasent company sold Asset to its esdiary with a profit, then while wonsolidation of the subsidiony, the profit will be eliminated from the value of Abort, therefore value Reproted in a 60o00o-150,000 wnsolidated Balance sheet - 500000 Hotel fit mode on Asset & 6ooooo 500ODO F10 (2) Invoure from vasquez in 2013 CAANANANANNTUNYAYAYAYAYAVILI the profit will be eliminated is above explained while consolidation a. Income & Net inwence in 2013 - profit on Asset sold by parent tre usrealised profit) = 600,000 - 200000 $500,000 122P2P1 12 (3) Income from vasquez in 2014 As the Asset sold to outsiden in 2014, the unrealis ad pofit is now realised then efore, the profit which is defersed in 2013 is now swored red in 2014. Income = Het income in 2004 t unrealised profit of 2013. - 46000oALovoro $560,000