Howard Corp. owned 80% of the outstanding common stock of Zest Inc. On January 1, 20X1, Howard acquired a building with a ten-year life for $500,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 20X3, Howard sold this building to Zest for $448,000. At that time, the building had a remaining life of eight years but still no expected salvage value. Which of the following is the consolidation entry to adjust depreciation expense and accumulated depreciation for the excess depreciation? O Debit Accumulated Depreciation at $4,800 and credit Depreciation Expense at $4,800 O Debit Depreciation Expense at $6,000 and credit Accumulated Depreciation at $6,000 O Debit Accumulated Depreciation at $6,000 and credit Depreciation Expense at $6,000 O Debit Depreciation Expense at $4,800 and credit Accumulated Depreciation at $4,800

Howard Corp. owned 80% of the outstanding common stock of Zest Inc. On January 1, 20X1, Howard acquired a building with a ten-year life for $500,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 20X3, Howard sold this building to Zest for $448,000. At that time, the building had a remaining life of eight years but still no expected salvage value. Which of the following is the consolidation entry to adjust depreciation expense and accumulated depreciation for the excess depreciation? O Debit Accumulated Depreciation at $4,800 and credit Depreciation Expense at $4,800 O Debit Depreciation Expense at $6,000 and credit Accumulated Depreciation at $6,000 O Debit Accumulated Depreciation at $6,000 and credit Depreciation Expense at $6,000 O Debit Depreciation Expense at $4,800 and credit Accumulated Depreciation at $4,800

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2022, Thomson acquired a building with a 10-year life for $344,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2024, Thomson sold this building to Stayer for $330,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2024, how does this transfer affect the computation of consolidated net income? Multiple Choice Net income is reduced by $62,100. Net income is reduced by $53,840. Net income is reduced by $48,300. Net income is reduced by $55,200.
Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2016, Thomson acquired a building with a 10-year life for $460,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2018, Thomson sold this building to Stayer for $430,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2018, how does this transfer affect the computation of consolidated net income?a. Net income is reduced by $62,400.b. Net income is reduced by $59,440.c. Net income is reduced by $70,200.d. Net income is reduced by $54,600.
WW Corporation owns 70 percent of the outstanding stock of HH, Incorporated. On January I, 20x4, WW acquired a building with a 10-year life for P300,000. WW anticipated no salvage value, and the building was to be depreciated on the straight-line basis. On January 1, 20x5 WW sold this building to HH for P280,000. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 20x5 How does this transfer affect the computation of consolidated net income? __________ (amount, then increase or decrease)
Gupta Co purchased a building on 30 June 19X9 for $250,000. At the date of purchase, Gupta estimated the useful life of the building to be 35 years. On 30 June 20X4, the building was revalued to $340,000 and there was no change in its useful life. On 31 December 20X5, Gupta Co sold the property for $450,000. The company’s policy is to depreciate property on a straight line basis with a proportionate charge in the years of acquisition and disposal. What is the profit on disposal to be recognised in the statements at 30 June 20X6?
Marco Towers Incorporated owns 80% of Flatbush Condos Company. Five years ago on January 1, Marco Towers acquired equipment with a twenty-year life for $1,800,000. No salvage value was anticipated and the equipment was to be depreciated on the straight-line basis. Five years later on January 1, Marco Towers sold the equipment to Flatbush Condos for $1,500,000. At that time, the equipment had a remaining useful life of fifteen years, but still had no expected salvage value. In preparing financial statements for the current year when the sale was made to Flatbush, how does this transfer affect the calculation of consolidated net income?
During its inception, Devon Company purchased land for $250,000 and a building for $200,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 20,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 20 years, with zero residual value. An appraisal revealed that the building has a fair value of $250,000. What will Devon record as Additional Paid in Capital as a result of this transaction? Group of answer choices additional paid-in capital of $0. additional paid-in capital of $270,000. additional paid-in capital of $350,000. additional paid-in capital of $300,000.
2) Several years ago, Pilot International purchased 70% of the outstanding stock of Skyway Incorporated, at a time when Skyway's book values were equal to its fair values. On January 1, 2011 Skyway purchased a truck for $80,000 which had no salvage value with a useful life of 8 years, depreciated on a straight-line basis. On January 1, 2014, Skyway sold the truck to Pilot Corporation for $28,000. The truck was estimated to have a five-year remaining life on this date, and no salvage value. All affiliates use the straight-line depreciation method. Required: Prepare all relevant entries with respect to the truck. 1. Record the journal entries on Pilot's books for 2014. 2. Record the journal entries on Skyway's books for 2014. 3. Prepare the consolidation entries required for Pilot and subsidiary for 2014 as a result of this transaction.
Choose the correct. Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2016, Thomson acquired a building with a 10-year life for $460,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2018, Thomson sold this building to Stayer for $430,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2018, how does this transfer affect the computation of consolidated net income?a. Net income is reduced by $62,400.b. Net income is reduced by $59,440.c. Net income is reduced by $70,200.d. Net income is reduced by $54,600.
Victory Co. owned 90% of the voting common stock of Walker Co. On January 3, 2022, Victory sold equipment to Walker for $160,000. The equipment cost Victory $180,000. At the time of the transfer, the balance in accumulated depreciation was $36,000. The equipment had a remaining useful life of eight years and a zero salvage value. Both entities use the straight-line method of depreciation. At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2022? $140.000 $132.800 $127.800 $126.000
Wildhorse Ltd. owned several manufacturing facilities. On September 15 of the current year, Wildhorse decided to sell one of its manufacturing buildings. The building had cost $7,920,000 when originally purchased 7 years ago, and had been depreciated using the straight-line method with no residual value. Wildhorse estimated that the building had a 30-year life when purchased. Prepare the journal entry to record the sale of the building on Wildhorse's books, assuming 7 years of depreciation has already been recorded in the accounts to the date of disposal. The building was sold for $6,302,000 cash. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Sept. 15 List of Accounts…
Pea Company purchased 70 percent of Split Company’s stock approximately 20 years ago. On December 31, 20X8, Pea purchased a building from Split for $360,000. Split had purchased the building on January 1, 20X1, at a cost of $460,000 and used straight-line depreciation on an expected life of 20 years. The asset’s total estimated economic life is unchanged as a result of the intercompany sale.a) What amount of income will be assigned to the noncontrolling interest in the consolidated income statement for 20X9 if Split reports net income of $40,000 for 20X9?b)Split reports assets with a book value of $310,000 and liabilities of $130,000 at January 1, 20X9, and reports net income of $40,000 and dividends of $17,000 for 20X9. What amount will be assigned to the noncontrolling interest in the consolidated balance sheet at December 31, 20X9, assuming the fair value of the noncontrolling interest at the date of acquisition was equal to 30 percent of Split Company’s book value?