Solutions to Additional Ch1 Review Questions

Solutions to Additional Ch1 Review Questions - Additional...

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Unformatted text preview: Additional Review Questions: 1) intra-entity Land Transfer (Downstream sale) Pepper acquires 80% of Salt on January 1, 2010 and uses the equity method to account for its investment in Salt. In 2010, Pepper sells land costing $2,000,000 to Salt for $2,300,000. Salt still holds the land at the end of 2011. Assume the land is sold to an outside party in 2012 for $3 million. Required: Prepare Peppers 2010, 2011 and 2012 internal entries required by the intra-entity land transfer. Dr: Cash 2,300,000 Pepper 2010: Cr: land 2,000,000 Cr: gain 300,000 Adjusted 12/31/2010: Dr: Equity in Salts income 300,000 Cr: Investment in Salt 300,000 Adjusted 12/31/2012: Dr: Investment in Salt 300,000 Cr: Equity in Salts income 300,000 2) intra-entity Land Transfer (Upstream sale) Pepper acquires 80% of Salt on January 1, 2010 and uses the equity method to account for its investment in Salt. In 2010, Salt sells land costing $2,000,000 to Pepper for $2,300,000. Pepper still holds the land at the end of 2011. still holds the land at the end of 2011....
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Solutions to Additional Ch1 Review Questions - Additional...

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