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3-During 2020, Parent sells land to Subsidiary for $226,800. The land had a book value of $159,000. The land is then sold to
4-On Jan 2, 2020, a subsidiary sells to its parent equipment that had cost $40,000. The selling price was $36,000 and accumul
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Answer #1
Parent
3 Cash 226800
TO Land 159000
To Gain on sale of land 67800
(Sale of land to subsidiarty)
Gain on sale of Land 67800
To Land 67800
(entries on consolidation)
eliminating profit and bringing land to cost
On further sale of land to unaffiliated party
Cash 303000
To Land 159000
To Gain on sale of land 144000
(being sale of land)
Gain on sale of land
Sale price 303000
Cost of land 159000
Gain 144000
4
Depreciation expense subsidiary
Cost 40000
Useful life 10 years
Salvage value 0
Straightline depreciation =(cost-salvage value)/useful life
=(40000-0)/10
4000
Depreciation expense parent
Cost 36000
Useful life 10
Salvage value 0
Straightline depreciation =(cost-salvage value)/useful life
=(36000-0)/10
3600
Difference in depreciation
Depreciation expense subsidiary 4000
Depreciation expense parent 3600
Balance 400
Gain on Sale
Cost Price of subsidiary 40000
Less: accumulated depreciation 14000
Value 26000
Sale price 36000
Gain 10000
Cash 36000
Accumulated depreciation 14000
To equipment 40000
To Gain on sale of equipment 10000
(sale of land)
Consolidation entries
Gain on sale of equipment 10000
To equipment 10000
Depreciation expense 400
To acummulated depreciation 400
(adjusting entries for depreciation)
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