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Advanced Accounting Assignment

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Submitted By charlie06
Words 414
Pages 2
Assignment 2

1. On February 7, 2014, a subsidiary sold land to its parent for $25,000, and showed a loss of $4,000. The parent sold the land to an outside party in 2018 for $30,000. At what amount should the land be shown on the December 31, 2014 consolidated balance sheet? How much gain/loss on the sale of the land should be reported on the 2018 consolidated income statement? Prepare the working paper entry (in journal entry format) for the intercompany sale for the parent and its subsidiary for the years ended December 31, 2014, 2015, and 2018.

2014 Land $4,000 Intercompany loss on sale $4,000

2018 Loss on sale of land $4,000 Retained earnings $4,000

2. Sally Corporation (a 75%-owned subsidiary) owned a truck with an original cost of $12,000. It had been depreciated for $7,500 in the last 5 years on the straight-line method with 8 years of life and no salvage value. On January 1, 2014, Sally sold the truck to its parent, Paulson Company for $5,280. Prepare the working paper entry (in journal entry format) for the intercompany sale for Paulson Company and subsidiary for the years ended December 31, 2014 and 2015. 2014
Intercompany gain on sale of truck $780 Truck $780

Accumulated Depreciation $260 Depreciation expense $260

Truck $7500 Accumulated depreciation $7500

2015
Retained earnings $520
Accumulated depreciation $260 Truck $780

Accumulated

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