X b 125 of the gain on sale equipment xx c 800 of the

X b. 12.5 % of the gain on sale.
c. 80.0 % of the gain on sale.
d. 100
5. Lorikeet Corporation acquired an 80% interest in Nectar Corporation on January 1,
2010 at a cost equal to book value and fair value. In the same year Nectar sold land
costing $50,000 to Lorikeet for $30,000. On July 1, 2015, Lorikeet sold the land to an
unrelated party for $110,000. What will be the gain reported on the consolidated
income statement for 2015?
a.
b.
X c.
d. $48,000
2

6. On January 1, 2018, P Corporation sold equipment with a 3-year remaining life and a
book value of $40,000 to its 70% owned subsidiary for a price of $46,000. In the
consolidated workpapers for the year ended December 31, 2019, the elimination
entries for this transaction will include a:
7. Perry Corporation owns 100% of Silva Company’s common stock. On January 1, 2018,
Perry sold equipment with a book value of $140,000 to Silva for $200,000. Silva is
depreciating the equipment over a ten-year life by the straight-line method. The net
adjustments to compute 2018 and 2019 consolidated income would be an increase
(decrease) of
2018 2019 Consolidated workpaper entries (2018):
X a. ($54,000) $6,000 Gain on Equipment 60,000
b. ($60,000) $0 Equipment 60,000
c. ($60,000) $6,000 Accumulate d Depreciation 6,000
d. ($54,000) $0 Depreciation Expense 6,000
Sales Price 200,000 Consolidated workpaper entries (2019):
Book value 140,000 Accumulated Depreciation 6,000
Gain 60,000 Investment in S 54,000
Equipment 60,000
60,000 = 6,000 Accumulate d Depreciation 6,000
10 Depreciation Expense 6,000