Sales by print to scroll are made on the same terms as those made to the parties
ID: 2477210 • Letter: S
Question
Sales by print to scroll are made on the same terms as those made to the parties. Equipment purchased by scroll from print for $36,000 on january 1, year 5, is depreciated using the straight-line method over four years. What amount should be reported as depreciation expense in pirn's year 5 consolidated income statement? $50,000 $41,000 $44,000 $47,000 Thomas Co. own 100% of Howard, Inc. On January 2, Year 9, Thomos sold equipment with an original cost of $100,000 and a carrying amount of $60,000 to Howard for $81,000. Thomas had been depreciating the equipment over a five-year period using straight-line depreciation with no residual value. Howard Is using straight-line depreciation over three years with no residual value. In Thomas' December 31, Year 9, consolidating worksheet, by what amount should depreciation expense be decreased? A. $27.000 $21.000 $7.000 $0 Assume that on January 2, company P recognized a $3,000 gain on the sale of a depreciable fixed asset to its subsidiary, company 5, company 5 will depreciate the assets using straight-line depreciate over the remaining three-year life of the assets. what amount of intercompany gain will be eliminated from p's retained earnings at the end of the year following the year of the intercompany fixed assest transactions? $3,000 $2,000 $1,000 $0Explanation / Answer
16.
Thomas Company has sold Equipment having carrying value of $60,000 at $81,000. The cost of machine recorded by Howard(to whom the asset is transferred) will record the asset at a transfer price of $81,000. Thomas has owned 100% of Haward Company therefore in the consolidated balance sheet the effect of transfer of asset should be eliminated and the asset should be presented at its original carrying value of the asset which is $60,000. The subsidiary Howard Company will record depreciation expense as $27,000 where as the original depreciation that should have been on the carrying value of the asset of $60,000 for remaining useful life of 3 years would be $20,000. Therefore in the consolidated balance sheet the excess depreciation of $7,000 should be eliminated. Therefore point C is correct answer.
Depreciation as per Haward=$81,000/3=$27,000
Depreciation as per Thomas=$60,000/3=$20,000
Excess depreciation= ($27,000-$20,000) =$7,000
17.
Company P has transferred Fixed asset to its subsidiary and recorded a gain on sale of asset as $3,000. This transfer is the downstream transfer of asset and therefore in the consolidated balance sheet the capital gain on sale of equipment of $3,000 will be eliminated to show the correct position of the financial statement. Therefore the option A is correct.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.