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Prepare consolidation spreadsheet for intercompany sale of equipment. Equity method Assume a parent company acquired its subsidiary on January , 2009, at a purchase price that was $320,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acquisition date. Of that excess, $220,000 was assigned to a Customer List that is being amortized over a 10 year period. The remaining $100,000 was assigned to Goodwill. In January of 2012, the wholly owned subsidiary sold Equipment to the parent for a cash price of $116.500. The subsidiary had acquired the equipment at a cost of $140,000 and depreciated the equipment over its 10 year useful life using the straight line method (no salvage value. The subsidiary had depreciated the equipment for 4 years at the time of sale. The parent retained the depreciation policy of the subsidiary and depreciated the equipment over it remaining 6 year useful life Financial statements of the parent and its subsidiary for the year ended December 31, 2013 Toow in parti below. The parent uses the equity method to account for its Equity Investment. The Customer List was amortized as part of the parents equity method accounting Prepare the journal entry that the subsidiary made to record the sale of the equipment to the parent the journal entry that the parent made to record the purchase and the entries for the yer of sale Note: Round answers to the nearest whole number. Jornal Entries Description Dube Cr Subsidiary Cath 116.500 Acumulated deprecation Gain on sale of equipment Property Seque OX Parent Property plant equipment Cash Town Ganon sale of me Property and equipment Accumulated deprecation Perl Accumulated deprediction Depreciation Expense OW 0 . ON . . 116.500 O OM 2500 0 5.417 O O 1300 O O ON . . 5417 b. Compute the remaining portion of the deferred gain on January 1, 2013 Round your answer to nearest whole number $ 30,667 C. Show the computation to yield the $127,417 of Income (loss) from subsidiary reported by the parent for the year ended December 31, 2013. Note: Use a negative sign with an answer to indicate a reduction in the computation Net income of subsidiary 144,000 AAP Depreciation Deferred gain on intercompany sale Income (loss) from subsidiary OX 16,583 X 0 x d. Compute the Equity Investment balance of $816,334 on December 31, 2013. Note: Use a negative sign with an answer to indicate a reduction in the computation Common stock 124.000 APIC 155,000 EOY Retained earnings 349,000 EOY Unamortized AAP OX Gain on intercompany sale 100,000 X Equity investment OX e. Prepare the consolidation entries for the year ended December 31, 2013. Consolidation Worksheet Description Debit Credit [C] Income (loss) from subsidiary 127,417 0 Dividends 0 20,000 Equity investment 0 107,417 [E] Common stock 124,000 0 APIC 155,000 0 Retained earnings 225,000 0 Equity investment 0 504,000 [A] Customer list 0 Goodwill 100,000 0 Equity investment OX [D] Operating expenses 0 x 0 Customer list 0 0 X Ilgain] Equity Investment 0 x Property, plant & equipment OX 0 Accumulated depreciation 0 X [ldepr] Accumulated depreciation OX 0 Depreciation Expense OX S > 0 > > 0

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