Pam Corporation holds 70 percent ownership of Spray Enterprises.On December 31, 20X6, Spray paid Pam $29,500 for a truck that Pamhad purchased for $34,500 on January 1, 20X2. The truck wasconsidered to have a 15-year life from January 1, 20X2, and noresidual value. Both companies depreciate equipment using thestraight-line method.
Required:
a. Prepare the worksheet consolidation entry or entries needed onDecember 31, 20X6, to remove the effects of the intercompany sale.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)
b. Prepare the worksheet consolidation entry or entries needed onDecember 31, 20X7, to remove the effects of the intercompany sale.(Do not round intermediate calculations. If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field.)
Pitcher Corporation purchased 60 percent of SoftballCorporation’s voting common stock on January 1, 20X1. On December31, 20X5, Pitcher received $243,000 from Softball for a truckPitcher had purchased on January 1, 20X2, for $303,000. The truckis expected to have a 10-year useful life and no salvage value.Both companies depreciate trucks on a straight-line basis.
Required:
a. Prepare the worksheet consolidation entry or entries needed atDecember 31, 20X5, to remove the effects of the intercompany sale.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)
b. Prepare the worksheet consolidation entry or entries needed atDecember 31, 20X6, to remove the effects of the intercompany sale.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.)
