ACT 470 Module 04 Assignment

Assume that Parent Company decides to sell Equipment (Cost = $10,000, Accumlated Depreciation = $1,000) to Sub for $20,000
cash. Show the sale and the subsequent elimination entries by Parent Company
Sale by Parent
Parent Company Balance Sheet
Assets, Liabilities & Equities
Cash
AR
Inventory
Land
Equipment
Accumulated Depreciation
Patent
Total Assets
AP
Common Stock
Additional Paid In Capital
Retained Earnings
Total Liabilities & Equity

Book Value
$1,500,000
$10,000
$200,000
$640,000
$400,000
-$150,000

Account

$0
$2,600,000
$100,000
$450,000
$600,000
$1,450,000
$2,600,000

Account

Sub Company Balance Sheet
Assets, Liabilities & Equities
Book Value
Cash
$35,000
AR
$10,000
Inventory
$65,000
Land
$40,000
PP&E
$400,000
Accumulated Depreciation
-$150,000
Patent
$0
Total Assets
$400,000
AP
$100,000
Common Stock
$100,000
Additional Paid In Capital
$50,000
Retained Earnings
$150,000
Total Liabilities & Equity
$400,000
Assume that book Value = Fair Value

DR

CR

DR

CR

DR

CR

Acquisition by Sub

Elimination Entries by Parent
Account