Intercompany Transactions I

Sapling, Inc. is a 95%-owned subsidiary of Fir Enterprises. Fir Enterprises sells Sapling an industrial wood chipper for $10,000 on January 1, 20x8. Fir Enterprises paid $17,000 for the wood chipper and the asset currently has a book value of $8,000. The asset has a remaining useful life of 4 years, with no salvage value.

• Provide Sapling’s entries reflecting the purchase of the wood chipper.
• Provide Fir’s entries reflecting the sale of the wood chipper.
• Provide the consolidating worksheet adjusting entries that must be made in 20x8.
• Provide the consolidating worksheet adjusting entries for 20x9 that deal with the impact of annual depreciation that occurs on the purchasing subsidiary’s books.

Please submit your assignment.

1–2 pages