Chapter 06 - Intercompany Transfers of Services and Noncurrent Assets
Sky Corporation owns 75 percent of Earth Company's stock. On July 1, 2008, Sky sold a
building to Earth for $33,000. Sky had purchased this building on January 1, 2006, for $36,000.
The building's original eight-year estimated total economic life remains unchanged. Both
companies use straight-line depreciation. The equipment's residual value is considered
4. Based on the information provided, in the preparation of the 2008 consolidated financial
statements, building will be _____ in the eliminating entries.
A. debited for $33,000
B. debited for $36,000
C. credited for $36,000
D. debited for $3,000
5. Based on the information provided, the gain on sale of the building eliminated in the
consolidated financial statements for 2008 is:
6. Based on the information provided, while preparing the 2008 consolidated income statement,