Question

Pitcher Corporation purchased 60 percent of Softball Corporation’s voting common stock on January 1, 20X1. On December 31, 20X5, Pitcher received $243,000 from Softball for a truck Pitcher had purchased on January 1, 20X2, for $333,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis.

Prepare the workshhet consolidation entry needed at december 31 20x1.

Answer 1

Please see solution below

Step-by-step explanation:

A Gain on sale = $243,000 - [$233,000 -( $233,000/10 × 3)]

= $79,900

Accumulated adjustment required

= $233,000/10 × 4

= $93,200

Minus reported = $243,000/7 × 1

= $34,714

Required increase

=$58,486

Depreciation expenses

= $233,000/10 × 3 - $58,486

=$11,414

Dr

Gain on sale of truck

$79,900

Dr

Truck

$90,000

Cr

Accumulated depreciation

$169,900

Dr

Accumulated depreciation

$11,414

Cr

Accumulated expense

$11,414