Question

Path:p Words: QUESTION 13 At the beginning of its operations, Delta Company purchased land for $100,000 and a building for $180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Roman Company, in exchange for 15,000 shares of Roman's $10 par value stock. Delta uses straight-line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal revealed that the land had a fair market value of 150,000 and the building had a fair value of $200,000 on the day of transfer Required: Provide the journal entry Delta made to record creation of its subsidiary TTTT Paragraph Arial 3 (12pt) + ng Τ' Τ. IE T-

Answer 1

Ans:

Journal Entries

Sr. No	Account Name	Debit ($)	Credit ($)
1.	Accumulated Depreciation ($180000/30) * 3 years	$18000
	Investment in Common stock of Roman Co (Balancing figure)	$312000
	Building		$100000
	Land		$180000
	Cash		$50000
	(Being assets transferred to Roman in exchange of common stock)
2.	Building	$162000
	Land	$100000
	Cash	$50000
	Common Stock (15000 * $10)		$150000
	Additional Capital (balancing figure)		$162000
	(Being subsidiary created)