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Preparing the $[$I$]$ consolidation entries for sale of depreciable assets$$Equity method$$

Assume that on January $1,2019,$ a parent sells to its wholly owned subsidiary, for a sale price of $$243,000,$ equipment that originally cost $$276,000.$ The parent originally purchased the equipment on January $1,2015,$ and depreciated the equipment assuming a $10-$year useful life $($straight$-$line with no salvage value$).$ The subsidiary has adopted the parent$$s depreciation policy and depreciates the equipment over the remaining useful life of $6$ years. The parent uses the equity method to account for its Equity Investment.$$

a$.$ Compute the annual pre$-$consolidation depreciation expense for the subsidiary $($post$-$intercompany sale$)$ and the parent $($pre$-$intercompany sale$).$

Subsidiary $-$ depreciation $Answer $1$

Parent $-$ depreciation $Answer $2$

b$.$ Compute the pre$-$consolidation Gain on Sale recognized by the parent during $2019.$

$Answer $3$

c$.$ Prepare the required $[$I$]$ consolidation entry in $2019($assume a full year of depreciation$).$

DescriptionDebitCredit$[$lgain$]$EquipmentAnswer $4$Answer $5$Answer $6$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSalesAnswer $7$Answer $8$

Answer $9$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales

Answer $10$Answer $11[$ldep$]$Answer $12$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSalesAnswer $13$Answer $14$Answer $15$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSalesAnswer $16$Answer $17$

d$.$ Prepare the required $[$l$]$ consolidation entry in $2022($assuming the subsidiary is still holding the equipment$).$

DescriptionDebitCredit$[$lgain$]$EquipmentAnswer $18$Answer $19$Answer $20$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSalesAnswer $21$Answer $22$

Answer $23$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSales

Answer $24$Answer $25[$ldep$]$Answer $26$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSalesAnswer $27$Answer $28$Answer $29$Accounts payableAccounts receivableAccumulated depreciationAPICCashCommon stockCost of goods soldDepreciation expenseEquipmentEquity investmentGain on saleLoss on saleGoodwillInventoryLandRetained earningsSalesAnswer $30$Answer $31$

a$.$ Compute the annual pre$-$consolidation depreciation expense for the subsidiary $($post$-$intercompany sale$)$ and the parent $($pre$-$intercompany sale$).$

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