Chapter 6 Homework Solutions

Chapter 6 Homework Solutions - [4][1] -...

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Unformatted text preview: [4][1] - Remember, this is an acquisition, not an intercompan2.d [1]a [5][2] - You can always plug in numbers if you're having trou3.b [2]bbuys the equipment for $10,000, uses it for two years, and4.aa$9,000. Salem's depreciation is $3,000 per year where th5.b [3]b [6]entity should still use Port's of $2,000 per year. A differen6.c [7]a third of the gain.[3] - Reduce depreciation expense by 1/4 or the gain:$40,000 + $10,000 - $12,000/4 = $47,000[4] - Since the sub is not wholly owned, and none of the elimination went to noncontrolling interest, this a downstream sale.[5] - R&D costs are expensed as incurred.[6] -45,000 Sub's net income(15,000) Undo the gain5,000 The portion of the gain "realized" through use of 1/3 of the asset's remaining life35,000 x 40% =14,000 [7] - $35,000 (from above) plus parent's separate income.E6-3a. (downstream)b. (upstream)12/31/X4Gain on sale of land10,000 10,000 Land10,000 10,000 12/31/X5Retained earnings10,000 6,000 Noncontrolling interest4,000 Land10,000 10,000 E6-5Service revenue76,000 Delivery expense76,000 Accounts payable18,000 Accounts receivable18,000 E6-612/31/X6Gain on sale of truck10,000 Northern is depreciatinTruck5,000 ($40,000 / 10); Pam waAccumulated depreciation - truck15,000 year ($45,000 / 15), whresulting in accumulate12/31/X7Truck5,000 the sale of $15,000Retained earnings10,000 Accumulated depreciation - truck14,000 Depreciation expense...
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This note was uploaded on 04/12/2011 for the course ACC 5120 taught by Professor Weimer during the Fall '10 term at Wayne State University.

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Chapter 6 Homework Solutions - [4][1] -...

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