Need help on the last deprecation entry Frazer Corporation purchased 60 percent
ID: 2446243 • Letter: N
Question
Need help on the last deprecation entry
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
a.
Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale
Gain on Sale 69,600
Truck 80,000
AC Deprecation 149,600
Record the entry to eliminate the gain on the truck and to correct the asset's basis.
Investment in Minnow 69,600
Truck 80,000
AC Deprecation 149,600
Record the entry to adjust Accumulated Depreciation.
Accumulated Depreciation XX
Depreciation Expense XX
a.
Prepare the worksheet consolidation entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale
Gain on Sale 69,600
Truck 80,000
AC Deprecation 149,600
Record the entry to eliminate the gain on the truck and to correct the asset's basis.
Investment in Minnow 69,600
Truck 80,000
AC Deprecation 149,600
Record the entry to adjust Accumulated Depreciation.
Accumulated Depreciation XX
Depreciation Expense XX
Explanation / Answer
Accumulated depreciation adjustment
Required ( 374,000/10 ) * 4 years = $149,600
Reported ( 294,000/7) * 1 yr = ( $42,000)
Required increse = $107,600
Adjustment entry
Gain on sale of truck $42,000 Truck $80,000 Deprecaition expense $107,600 Accumulated depreciation 14,400Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.