6-10 - E6-10 Sale of Equipment to Subsidiary in Current...

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Unformatted text preview: E6-10 Sale of Equipment to Subsidiary in Current Period WL Cost A/D Book Val Sale price Gain 150,000 80,000 70,000 84,000 14,000 Life 15 7 7 10,000 10,000 12,000 2,000 a. Journal entry to record sale: by Wainwrite to record sale Cash Accumulated Depreciation Equipment Gain on Sale of Equipment Record the sale of equipment: $84,000 = $150,000 - $80,000 + $14,000 $80,000 = ($150,000 / 15 years) x 8 years 84,000 80,000 150,000 14,000 b. Journal entry to record purchase by Lance: Equipment Cash Journal entry to record depreciation expense: Depreciation Expense Accumulated Depreciation 12,000 12,000 84,000 84,000 c. Eliminating entry at December 31, 20X7, to eliminate intercompany sale of equipment: E(1) Equipment Gain on Sale of Equipment Accumulated Depreciation Eliminate unrealized profit on equipment. Accumulated Depreciation Depreciation Expense to adjust current year charges 66,000 14,000 80,000 2,000 2,000 d. Eliminating entry at January 1, 20X8, to eliminate intercompany sale of equipment and prepare a consolidated balance sheet only: E(1) Equipment 66,000 Retained Earnings 12,000 Accumulated Depreciation 78,000 Eliminate unrealized profit on equipment. Eliminating entry at December 31, 20X8, to eliminate intercompany sale of equipment : Equipment Retained Earnings Accumulated Depreciation Eliminate unrealized profit on equipment. Accumulated Depreciation Depreciation Expense to adjust current year charges 66,000 12,000 78,000 2,000 2,000 ...
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This note was uploaded on 04/18/2008 for the course ACCT cost taught by Professor Staff during the Spring '08 term at Oklahoma State.

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6-10 - E6-10 Sale of Equipment to Subsidiary in Current...

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