Assume that in 2020, a parent company sells equipment that has a remaining life of 10 years to one of its subsidiaries. The parent recorded gains on the sale of equipment in its own books in 2020. How will each of the following accounts be adjusted in the consolidation worksheet at the end of 2022? Retained Earnings - Credited Parent Retained Earnings - Debited Subisidiary Equipment Credited Gain on Sale of Debited Equipment 4 > >

Assume that in 2020, a parent company sells equipment that has a remaining life of 10 years to one of its subsidiaries. The parent recorded gains on the sale of equipment in its own books in 2020. How will each of the following accounts be adjusted in the consolidation worksheet at the end of 2022? Retained Earnings - Credited Parent Retained Earnings - Debited Subisidiary Equipment Credited Gain on Sale of Debited Equipment 4 > >

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 19E

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Comprehensive: Income Statement and Retained Earnings Milwaukee Manufacturing Company presents the following partial list of account balances, after adjustments, as of December 31, 2019: The following information is also available but is not reflected in the preceding accounts: a. The company sold Division E (a major component of the company) on August 2, 2019. During 2019, Division E had incurred a pretax loss from operations of 16,000. However, because the acquiring company could vertically integrate Division E into its facilities, Milwaukee Manufacturing was able to recognize a 42,000 pretax gain on the sale. b. On January 2, 2019, without warning, a foreign country expropriated a factory of Milwaukee Manufacturing which had been operating in that country. As a result of that expropriation, the company has incurred a pretax loss of 30,000. c. The common stock was outstanding for the entire year. A cash dividend of 1.20 per share was declared and paid in 2019. d. The 2019 income tax expense totals 31,050 and consists of the following: Required: 1. As supporting documents for Requirement 2, prepare separate supporting schedules for selling expenses and for general and administrative expenses (include depreciation expense where applicable in these schedules). 2. Prepare 2019 multiple-step income statement for Milwaukee Manufacturing. 3. Prepare a 2019 retained earnings statement. 4. Next Level What was Milwaukee Manufacturings return on common equity for 2019 if its average shareholders equity during 2019 was 500,000? What is your evaluation of this return on common equity if its target for 2019 was 15%? 5. Next Level Discuss how Milwaukee Manufacturings income statement in Requirement 2 might be different if it used IFRS.
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