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Artist 52 [7]
4 years ago
11

Play Inc. owns 100% of Station Corp.'s common stocks. On January 1, 2015, Play sold to Station for $50,000 an equipment with a c

arrying amount of $30,000. Station is depreciating the equipment over a 5-year life using the straight-line method. Describe the two adjustments and provide the amounts made in 2015 consolidated income statement.
Business
1 answer:
victus00 [196]4 years ago
5 0

Answer:

There is unrealised profit on the equioment sold by Play inc to Statetion Corp.

the Adjustment include

  • Deduct net unrealised profit of $16,000  from Equipment
  • Deduct net unrealised profit of $16,000 from  Group(consolidated )retained earnings.

Amount to be recognized as unrealized profit in the consolidated income statement is $16,000

Explanation:

Computation of Net unrealized profit

Unrealized profit ( $50,000 - $30,000)                       20,000

Depreciation on Unrealized profit( 20,000/5)              <u>  (4,000</u>)

Net unrealized profit                                                      <u>   16,000</u>

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The impact of the vendor with the zero opening balance is to show that the account has been correctly set up.

<h3>What is the vendor opening balance?</h3>

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The opening balance is what would have to be brought forward at the end of an accounting period and it is usually what the vendor would have to use as they try to keep a track of the cash flow that is in their account.

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1 year ago
The Pinetop Corporation issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2014. All remaining shares
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