90.2K

Verified Solution

Link Copied!

On January 1st 2020, Hulk Company acquired all of the stock of Spiderman Company at book value. Hulk uses the initial value method to account for its investment in Spiderman and Spiderman doesn't pay any dividends

On January 1st 2015 Hulk purchased a piece of equipment for $100,000. This equipment is expected to last 10 years with $7000 salvage; Hulk uses straight line depreciation.

On January 1, 2018, Hulk sold the equipment to Spiderman for $81,000 receiving a 1 year 12% note with principle and interest due January 1, 2019. Spiderman believes the equipment will last 7 years and have a $4000 salvage.

On January 1, 2021 Spiderman sold the equipment to Aquaman (an outside company) for $57,000 cash.

Required:

A) Make Hulk's journal entry when they sold the equipment at to Spiderman

b) make Spiderman's journal entry when they buy the equipment from Hulk

c) Make the necessary worksheet entries for 2018

d) Hulk reported unconsolididated income of $500,000 in 2018 and Spiderman reported income of $70,000. What is consolidated income?

e) make the necessary worksheet entries for 2019

f) make the journal entry Spiderman makes when it sells the equipment to Aquaman

g) In 2021 Hulk reported income (unconsolidated) of $625,000 and Spiderman reported income of $123,000 what is consoldiated income

Answer & Explanation Solved by verified expert

See Answer