Crater Inc. acquired 70% of Meter Inc's voting common stock on Jan 1, 2007. On January 1, 2010, Crater Inc received $350,000 from Meter Inc. for equipment that Crater purchased on Jan 1, 2005 for...
Crater Inc. acquired 70% of Meter Inc's voting common stock on Jan 1, 2007.
On January 1, 2010, Crater Inc received $350,000 from Meter Inc. for equipment that Crater purchased on Jan 1, 2005 for $400,000.
The equipment originally was expected to have a 20 year useful life and no salvage value but Meter decided the remaining life would only be 10 years.
a. Prepare entry for the sale of the asset on Crater's books.
b, Prepare entry for the purchase on the asset on Meter's books
c. Prepare consolidated workpaper eliminating entry or entries needed at 12/31/10
d. On the consolidated balance sheet, what amount would be reported for the accumulated depreciation as related to the above asset?
Homework Answers
1.
Bank Account Dr 350000
To Equipment A/c 300000
To Profit on sale of Asset 50000
(400000-(400000/20*5))
2.
Equipment Dr 350000
To Bank Account 350000
3.
a) Profit on Sale of Asset Dr 50000
To Equipment A/c 500000
b) Equipment Dr (35000-20000) 15000
To depreciation (written back) 15000
4.
Accmuated Depreciation will be 120000
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