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Prepare the working paper entries for the intercompany sale

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Reference no: EM132525113

Question - Ponds owned a machine with an original cost of $100,000. It had been depreciated in the last 7 years on the straight-line method with 10 years of life and no salvage value. On January 1, 2017, Ponds sold the machine to Square One Corporation (a 75%-owned subsidiary) for $42.000 in cash.

Thereafter, Square One provided for depreciation also on the straight-line method with 3 more years of life after the date of purchase and no salvage value. On Jan 1, 2019, Square One sold the machine to an outside company for $15,000.

Required -

1) Prepare the working paper entries for the intercompany sale of machine on December 31, 2017.

2) Prepare the working paper entries relating to the machine on December 31, 2018.

3) Bonus Question: Prepare the working paper entries relating to the machine on December 31, 2019.

Reference no: EM132525113

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