Reference no: EM131010475

Perform the accounting required for the elimination of each independent intercompany transaction:

Prepare the book calculations

Perform the required journal entries

Requirements:

Complete all work on the spreadsheet attached to this assignment; it will be your only deliverable.

Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions. Submit a single MS Excel file for grading.

Review the grading rubric, which can be accessed from the Course Information page, to understand how you will be graded on this assignment.

Reach out to your instructor if you have questions about the assignment.
Assume that Parent Company decides to sell Equipment (Cost = $10,000, Accumulated Depreciation = $1,000) to Sub for $20,000 cash. Show the sale and the subsequent elimination entries by Parent Company.

Parent Company Balance Sheet
Assets, Liabilities & Equities	Book Value
Cash	$1,500,000
AR	$10,000
Inventory	$200,000
Land	$640,000
Equipment	$400,000
Accumulated Depreciation	-$150,000
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
Total Liabilities & Equity	$2,600,000

 

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

Sale By Parent
Account	DR	CR

 

Acquisition by Sub
Account	DR	CR

 

Elimination Entries by Parent
Account	DR	CR