Reference no: EM132583341

Point Company was established on January 1, 20X1. Along with other assets, it immediately purchased land for $90,000, a building for $250,000, and equipment for $60,000. On January 1, 20X5, Point transferred these assets, cash of $20,000, and inventory costing $40,000 to a newly created subsidiary, ASWAN Company, in exchange for 30,000 shares of ASWAN's $2 par value stock. Point uses straightline depreciation and useful lives of 40 years and 20 years for the building and equipment, respectively, with no estimated residual values.

Required

Question a. Give the journal entry that Point recorded when it transferred the assets to ASWAN.

Question b. Give the journal entry that ASWAN recorded for the receipt of assets and issuance of common stock to Point.