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Chapter 6 Homework Solutions

Chapter 6 Homework Solutions - [1 Remember this is an...

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E6-1 E6-2 1. c d [4] [1] - Remember, this is an acquisition, not an intercompan 2. d [1] a [5] [2] - You can always plug in numbers if you're having troub 3. b [2] b buys the equipment for \$10,000, uses it for two years, and 4. a a \$9,000. Salem's depreciation is \$3,000 per year where th 5. b [3] b [6] entity should still use Port's of \$2,000 per year. A differen 6. 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 gain 5,000 The portion of the gain "realized" through use of 1/3 of the asset's remaining life 35,000 x 40% = 14,000 [7] - \$35,000 (from above) plus parent's separate income. E6-3 a. (downstream) b. (upstream) 12/31/X4 Gain on sale of land 10,000 10,000 Land 10,000 10,000 12/31/X5 Retained earnings 10,000 6,000 Noncontrolling interest 4,000 Land 10,000 10,000 E6-5 Service revenue 76,000 Delivery expense 76,000 Accounts payable 18,000 Accounts receivable 18,000

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E6-6 12/31/X6 Gain on sale of truck 10,000 Northern is depreciatin Truck 5,000 (\$40,000 / 10); Pam wa Accumulated depreciation - truck 15,000 year (\$45,000 / 15), wh
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Chapter 6 Homework Solutions - [1 Remember this is an...

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