Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common st

Question

Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common stock on January 1, 20X1. On December 31, 20X5, Frazer received $294,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $374,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis.

Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale.

b

Prepare the worksheet consolidation entry or entries needed at December 31, 20X6, to remove the effects of the intercompany sale

Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common stock on January 1, 20X1. On December 31, 20X5, Frazer received $294,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $374,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis.

Explanation / Answer

Hope this helps.

depreciation per year = 374000/10 $37,400 depreciation for 4 years =37400 x 4 $149,600 Truck = 374000 - 294000 $80,000

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