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 $154,500 in net income (including sales to affiliates) in 2014.
Prepare the 2014 and 2015 consolidated statements workpaper entries
to eliminate the effects of this sale of equipment. (If
no entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Credit account titles are automatically
indented when the amount is entered. Do not indent
manually.)
I need help with solving this problem and put the correct name on the account. HELP PLEASE!!
Homework Answers
Answer :-
| Date | Account Titles and Explanation | Debit | Credit |
| 2014 | Gain on sale of Equipment A/c Dr. | 73,500 | |
| To Equipment A/c | 73,500 | ||
| (To eliminate equipment) | |||
| Accumulated Depreciation A/c Dr. | $24,500 | ||
| To Depreciation Expense | $24,500 | ||
| (To eliminate depreciation on equipment) | |||
| 2015 | Retained Earning Beginning - Pomeroy A/c Dr. (73,500 × 90%) | 66150 | |
| Non controlling Interest A/c Dr. (73,500× 10%) | 7,350 | ||
| To Equipment A/c | 73,500 | ||
| (To eliminate equipment) | |||
| Accumulated Depreciation A/c Dr. | 49,000 | ||
| To Depreciation Expense A/c | 24,500 | ||
| To Retained Earning Beginning - Pomeroy A/c (24,500 × 90%) | 22,050 | ||
| To Non controlling Interest A/c (24,500 × 10%) | 2,450 | ||
| (To eliminate depreciation on equipment) | |||
Working Notes -
Equipment Cost - $631,800
Proceed from sale - $705,300
(Gain) /Loss on sale of equipment = Equipment cost - Proceed from sale =$631, 800 - $705,300
Gain on sale of Equipment = 73,500
This equipment has a remaining useful life of three years
Depreciation on Cost =$631,800/3 Years = $210,600
Depreciation on sale amount = $705,300/ 3 = $235,100
Excess Depreciation =Difference of cost and sale amount of Depreciation
Excess Depreciation =$ 210,600 - $235,100
Excess Depreciation = $24,500
Add Answer to:
Exercise 7-12
Pomeroy Corporation owns an 80% interest in Sherer Company and a
90% interest in...
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represented inventory to Pinta Company, had a cost to Pinta Company
of $322,400. The management of Standard Company estimated that the
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In 2014, Pinta Company reported...
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Seacore Company sells merchandise to Peel Company at 20% above
cost. During 2014 and 2015, such sales amounted to $451,400 and
$482,600, respectively. At the end of each year, Peel Company had
in its inventory one-fourth of the goods purchased from Seacore
Company during that year.
Peel Company reported $309,400 in net income from its independent
operations in 2014 and 2015. Seacore Company reported net income of
$117,600 in...
Pinta Company, a forklift manufacturer, owns 80% of the voting
stock of Standard Company. On January 1, 2014, Pinta Company sold
forklifts to Standard Company for $412,400. The forklifts, which
represented inventory to Pinta Company, had a cost to Pinta Company
of $322,400. The management of Standard Company estimated that the
forklifts had a useful life of nine years from the date of
purchase. Standard Company uses the straightline method to
depreciate its capital assets.
In 2014, Pinta Company reported...
* Exercise 5-15 A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The common stock balance of Saxton Corporation was $2,953,800 on this date, and the balance in retained earnings was The cost of the investment to Palm Incorporated was $3,774,000. The balance sheet information available for Saxton Corporation on the acquisition date revealed these values: Inventory (FIFO) Equipment (net) Land Book Value $687,400 1,988,100 1,630,600 Fair Value $798,200 1,988,100 1,961,300 The equipment was...
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Peel Company reported $309,400 in net income from its independent
operations in 2014 and 2015. Seacore Company reported net income of
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