| Assume that Parent Company decides to sell Equipment (Cost = $10,000, Accumlated Depreciation = $1,000) to Sub for $20,000 cash. Show the sale and the subsequent elimination entries by Parent Company |
| Parent Company Balance Sheet | | | Sale by Parent |
| Assets, Liabilities & Equities | Book Value | | Account | DR | CR |
| Cash | $1,500,000 |
| AR | $10,000 |
| Inventory | $200,000 |
| Land | $640,000 |
| Equipment | $400,000 |
| Accumulated Depreciation | -$150,000 |
| | | | Acquisition by Sub |
| Patent | $0 | | Account | DR | CR |
| Total Assets | $2,600,000 |
| AP | $100,000 |
| Common Stock | $450,000 |
| Additional Paid In Capital | $600,000 |
| Retained Earnings | $1,450,000 | | Elimination Entries by Parent |
| Total Liabilities & Equity | $2,600,000 | | Account | DR | CR |
| Sub Company Balance Sheet |
| Assets, Liabilities & Equities | Book Value |
| Cash | $35,000 |
| AR | $10,000 |
| Inventory | $65,000 |
| Land | $40,000 |
| PP&E | $400,000 |
| Accumulated Depreciation | -$150,000 |
| Patent | $0 |
| Total Assets | $400,000 |
| AP | $100,000 |
| Common Stock | $100,000 |
| Additional Paid In Capital | $50,000 |
| Retained Earnings | $150,000 |
| Total Liabilities & Equity | $400,000 |
| Assume that book Value = Fair Value |
lar.ro
act470_studenttemplate_ct_mod04_opt1.xlsx
