Multiple Transfers of Asset
Swanson Corporation purchased land from Clayton Corporation for $240,000 on December 20, 20X3. This purchase followed a series of transactions between Swanson-controlled subsidiaries. On February 7, 20X3, Sullivan Corporation purchased the land from a non affiliate for $145,000. It sold the land to Kolder Company for $130,000 on October 10, 20X3, and Kolder sold the land to Clayton for $180,000 on November 27, 20X3. Swanson has control of the following companies:
Subsidiary | Level of Ownership | 20X3 Net Income |
Sullivan Corporation | 80 percent | $120,000 |
Kolder Company | 70 percent | 60,000 |
Clayton Corporation | 90 percent | 80,000 |
Swanson reported income from its separate operations of $150,000 for 20X3.
Required
a.At what amount should the land be reported in the consolidated balance sheet as of December 31, 20X3?
b.What amount of gain or loss on sale of land should be reported in the consolidated income statement for 20X3?
c.What amount of income should be assigned to the controlling shareholders in the consolidated income statement for 20X3?
d.Give any elimination entry related to the land that should appear in the worksheet used to prepare consolidated financial statements for 20X3.
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