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PTT Corporation owns 80% of SDW Company, acquired two years ago. SDW's recorded net assets had carrying values that approximated fair value, but it had previously unrecorded identifiable intangible assets with a fair value of $600,000, to be straight-line amortized over 20 years.

PTT sold equipment to SDW on January 1, 2012 for $300,000. PTT's book value for the equipment was $200,000, and accumulated depreciation at the date of sale was $50,000. The equipment had a remaining life of five years, to be recorded on a straight line basis. SDW still holds the equipment. SDW sold a building to PTT on January 1, 2013 for $250,000. SDW's book value for the building was $400,000 and accumulated depreciation at the date of sale was $60,000. The building has a remaining life of ten years, to be recorded on a straight line basis. PTT still holds the building.

For each year, 2012 & 2013:

A. Prepare in general journal form, the entries necessary on the books of PTT and SDW to account for the equipment and building

B. Prepare in general journal form the entries necessary on the consolidated statements work paper to properly adjust the equipment and building account.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M940265

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