Porch Company owns a 90% interest in the Screen Company. Porch sold Screen a milling machine...
Porch Company owns a 90% interest in the Screen Company. Porch sold Screen a milling machine on January 1, 2016, for $50,000 when the book value of the machine on Porch's books was $40,000. Porch financed the sale with Screen signing a 3-year, 8% interest, and note for the entire $50,000. The machine will be used for 10 years and depreciated using the straight-line method. Interest is accrued at year end. What will be the amounts eliminated in preparing the 2016 consolidated financial statements?
Homework Answers
ANSWER:
| Eliminated interest expense (50000*8%) | $ 4,000 |
| Eliminated interest revenue (50000*8%) | $ 4,000 |
| Depreciation expense as per equipment transferred value (50000/10) | $ 5,000 |
| Depreciation expense as per book value (40000/10) | $ 4,000 |
| Eliminate excess depreciation | $ 1,000 |
| What will be the amounts eliminated in preparing the 2016 consolidated financial statements? | |
| Eliminated interest expense | $ 4,000 |
| Eliminated interest revenue | $ 4,000 |
| Eliminated depreciation expense | $ 1,000 |
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Porch Company owns a 90% interest in the Screen Company. Porch
sold Screen a milling machine...
Porch Company owns a 90% interest in the Screen Company. Porch sold Screen a milling machine on January 1, 2016, for $50...
Porch Company owns a 90% interest in the Screen Company. Porch sold Screen a milling machine on January 1, 2016, for $50,000 when the book value of the machine on Porch's books was $40,000. Porch financed the sale with Screen signing a 3-year, 8% interest, and note for the entire $50,000. The machine will be used for 10 years and depreciated using the straight-line method. Interest is accrued at year end. What will be the amounts eliminated in preparing the...
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Exercise 7-12
Pomeroy Corporation owns an 80% interest in Sherer Company and a
90% interest in Tampa Company. On January 2, 2014, Tampa Company
sold equipment with a book value of $631,800 to Sherer Company for
$705,300. This equipment has a remaining useful life of three
years. Sherer Company reported $108,800 and Tampa Company reported
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Prepare the 2014 and 2015 consolidated statements workpaper entries
to eliminate the effects of this...
Peat Company owns a 90% interest in Seaton Company. The
consolidated income statement drafted by the controller of Peat
Company appeared as follows:
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Company and Subsidiary
Consolidated Income Statement
for Year Ended December 31, 2015
Sales
$14,098,400
Cost of Sales
9,191,200
Operating Expense
1,784,000
10,975,200
Consolidated Income
3,123,200
Less Noncontrolling Interest
in Consolidated Income
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Controlling Interest in
Consolidated Net Income
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