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 2016 consolidated financial statements?
Homework Answers
| 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 on January 1, 2016, for $50...
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...
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