Farm owns 70% of the common shares of XL and accounts for its investment using the cost method.In 20X6,Farm purchased equipment from XL for $300,000.The equipment had been purchased by XL for $420,000 in 20X2,had accumulated depreciation of $168,000 and a six-year remaining life at December 31,20X5.Both companies record a full year of depreciation expense in the year of the purchase and no depreciation in the year of a sale.
Required:
Indicate the consolidation adjustments to the following accounts for the years ended 20X6,20X8 and 20X11:
• depreciation expense
• net book value of equipment
• non-controlling interest on statement of comprehensive income
• non-controlling interest on statement of financial position
• retained earnings,end of year

Question

Quizplus · Accepted Answer

The Answer of Farm owns 70% of the common shares of XL and accounts for its investment using the cost method.In 20X6,Farm purchased equipment from XL for $300,000.The equipment had been purchased by XL for $420,000 in 20X2,had accumulated depreciation of $168,000 and a six-year remaining life at December 31,20X5.Both companies record a full year of depreciation expense in the year of the purchase and no depreciation in the year of a sale.
Required:
Indicate the consolidation adjustments to the following accounts for the years ended 20X6,20X8 and 20X11:
• depreciation expense
• net book value of equipment
• non-controlling interest on statement of comprehensive income
• non-controlling interest on statement of financial position
• retained earnings,end of year

Farm Owns 70% of the Common Shares of XL and Accounts