Question

During 2013, Pier One Company billed its 80% owned subsidiary, Scale Company, $723,600 for architectural services. The cost to Pier One Company of providing the services was $426,500 for salaries and $147,100 for other operating expenses. Scale Company charged the architecture fees to the cost of a building that it opened on January 1, 2014. The building had an estimated useful life of 30 years.

Prepare in general journal form the workpaper entries relating to the intercompany fees that are necessary in the consolidated statements workpapers for the years ended December 31, 2013, 2014, and 2015.

Date	Account Titles and Explanation	Debit	Credit
2013
2014
	(To eliminate buildings)
	(To eliminate depreciation)
2015
	(To eliminate buildings)
	(To eliminate depreciation)

Answer 1

Solis - Pied one company billed its 80% owned subsidinovy. Scale company, $723.600 for archütectural services. - The cost to pier one company of providing the Services was $426.500, for salaries and $147.100 for other operating expenses. -> Scale company changed the architecture fees to the cost of building that is opened on January 1. 2014. Journal NO. Particulars Debit credit. Year ended 31 December 2013 723.600 Revenue, capital work in progress ( building 723600 606 8001 2. Capital Wok on Progress (building) other operation expenses. Solaries. 153.900 426.500

year ended 31 December 2014 147.100 Retained earnings Building. 147.100 Building 4903 Depreciation expense.. 4903 year, ended 31 December 2015. Retained earnings 147.100 Building 147.100 Building 4903 Depreciation expense. 4903 1) The revenue of parent reversed against amount capitalised as capital work in progress subsidiary 2) If the amount of expenses inceoored by parent. Deversed in consolidated books. 2. as these are eligible for capitalisation in subsidina

Hence. added to asset in consolidated book. 3. The stand and impact of Journals above incorporated in the consolidated financia statements fo 2014 4. Excess depreciation changed in the books OG Subsidi cary due to cost being higher by 147.100 deversed The amount of depreciation reversal is : Saladies 147.100 30 Years =4903 the amount of depreciation reversoul is=4903) 5. The impact of souonal is 3 It includes impact your -nou 1 and 2 and souonol a incorporated as an opening adjcestment for consolidated financial statements 06 2015. 6. Excess depreciation charged in the books subsidieroy due to cost being higher by 147.100 reversed cas historic cost is also reduced) Amount of depreciation reverse a salaries 147.100 years Tramunt de depreciation reversal = 4903. 30