Intercompany Transfers of Land

Chapter 6

Intercompany Transfers of Land

CLASS EXERCISE NO 1 - SOLUTION

a. PARENT’S BOOKS -20X1:

Cash 4.500

Investment in S Company Stock 4.500

Investment in S Company Stock 9.000

Income from Subsidiary 9.000

b. SUBSIDIARY'S BOOKS-20X1:

Cash 17.000

Land 15.000

Gain on Sale of Land 2.000

c. 20X1 CONSOLIDATION WORKPAPER:

Income from Subsidiary 9.000

Dividends Declared-S Company 4.500

Investment in S Company Stock 4.500

Income to Noncontrolling Interest 800

Dividends Declared-S Company 500

Noncontrolling Interest 300

Capital Stock-S Company 50.000

Retained Earnings-1/1 30.000

Land 3.000

Investment in S Company Stock 75.000

Noncontrolling Interest 8.000

Gain on Sale of Land 2.000

Land 2.000

Consolidated Net Income Consolidated Retained Earnings

$70.000 $ 90.000

$10.000 70.000

$80.000 10.000

(2.000) $170.000

(800) (2.000)

$77.200 (800)

(10.000)

$157.200

d. PARENT’S BOOKS-20X2:

Cash 4,500

Investment in S Company Stock 4,500

Investment in S Company Stock 10,800

Income from Subsidiary 10,800

e. 20X2 CONSOLIDATION WORKPAPER:

Income from Subsidiary 10,800

Dividends Declared-S Company 4,500

Investment in S Company Stock 6,300

Income to Noncontrolling Interest 1,200

Dividends Declared-S Company 500

Noncontrolling Interest 700

Capital Stock-S Company 50,000

Retained Earnings-1/1 35,000

Land 3,000

Investment in S Company Stock 79,500

Noncontrolling Interest 8,500

Retained Earnings-1/1 1,800

Noncontrolling Interest 200

Land 2,000

Consolidated Net Income Consolidated Retained Earnings

$ 90.000 $157,200

$ 12.000 100,800

$102,000 (10.000)

(1.200) $248.000

$100.800

Chapter 6

Intercompany Transfers of Land

CLASS EXERCISE NO 2- SOLUTION

a. PARENT’S BOOKS - 20X1:

Cash 4,500

Investment in S Company Stock 4,500

Investment in S Company Stock 9,000

Income from Subsidiary 9,000

b. SUBSIDIARY’S BOOKS-20X1:

Cash 7,000

Accumulated Depreciation 1,800

Equipment 6,000

Gain on Sale of Equipment 2,800

c. 20X1 CONSOLIDATION WORKPAPER:

Income from Subsidiary 9,000

Dividends Declared-S Company 4,500

Investment in S Company Stock 4,500

Income to Noncontrolling Interest 760

Dividends Declared-S Company 500

Noncontrolling Interest 260

Capital Stock-S Company 50,000

Retained Earnings- 1/1 30,000

Land 3,000

Investment in S Company Stock 75,000

Noncontrolling Interest 8,000;

Gain on Sale of Equipment 2,800

Equipment 1,000

Accumulated Depreciation 1,800

Accumulated Depreciation 400

Depreciation Expense 400

Consolidated Net Income Consolidated Retained Earnings

$70,000 $ 90,000

10.000 76,840

$80,000 (10.000)

(2,800) $156.840

400

(760)

$76.840

d. PARENT’S BOOKS - 20X2:

Cash 4.500

Investment in S Company Stock 4.500:

Investment in S Company Stock 10.800

Income from Subsidiary 10.800

e. 20X2 CONSOLIDATION WORKPAPER:

Income from Subsidiary 10.800

Dividends Declared-S Company 4.500

Investment in S Company Stock 6.300

Income to Noncontrolling Interest 1.240

Dividends Declared-S Company 500

Noncontrolling Interest 740

Capital Stock-S Company 50.000

Retained Earnings-Ill 35.000

Land 3.000

Investment in S Company Stock 79.500

Noncontrolling Interest 8.500

Retained Earnings – 1/1 2.160

Noncontrolling Interest 240

Equipment 1.000

Accumulated Depreciation 1.400

Accumulated Depreciation 400

Depreciation Expense 400

Consolidated Net Income Consolidated Retained Earnings

$ 90.000 $156.840

12.000 101.160

$102.000 (10.000)

400 $248.000

(1.240)

$101.160