Journal entries and consolidated income statement (downstream sale off building)Sal is a 9...

Journal entries and consolidated income statement (downstream sale off building)

Sal is a 90 percent-owned subsidiary of Pig Corporation, acquired at book value several years ago. Comparative separate-company income statements for the affiliates for 2011 are as follows:

On January 5, 2011, Pig sold a building with a 10-year remaining useful life to Sal at a gain of $30,000. Sal paid dividends of $100,000 during 2011.

REQUIRED

1. Reconstruct the journal entries made by Pig during 2011 to account for its investment in Sal. Explanations of the journal entries are required.

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2. Prepare a consolidated income statement for Pig Corporation and Subsidiary for 2011.