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Assignment Option: Intercompany Transactions - Equipment
Using the data in the Option 1 Spreadsheet (linked at the bottom of the page), perform the accounting required for the elimination of each independent intercompany transaction:
Prepare the book calculations
Perform the required journal entries
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
Parent Company Balance Sheet
Sale by Parent
Assets, Liabilities & Equities
Book Value
Account
DR
CR
Cash
$1,500,000
AR
$10,000
Inventory
$200,000
Land
$640,000
Equipment
$400,000
Accumulated Depreciation
-$150,000
Acquisition by Sub
Patent
$0
Total Assets
$2,600,000
AP
$100,000
Common Stock
$450,000
Additional Paid In Capital
$600,000
Retained Earnings
$1,450,000
Elimination Entries by Parent
Total Liabilities & Equity
Sub Company Balance Sheet
$35,000
$65,000
$40,000
PP&E
$50,000
$150,000
Assume that book Value = Fair Value
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