Piglet Incorporated purchased 90% of the outstanding stock of Sourgrape Company several years ago at book value.At January 1,2010,Sourgrape sold land with a book value of $30,000 to Piglet at its fair market value of $40,000.At the same time,Sourgrape sold the building that was on the land to Piglet.The building had a book value of $80,000 and was sold at its fair value of $120,000.The building had a remaining useful life of 8 years and is depreciated using the straight-line method.The building has no salvage value.On January 1,2012,Piglet sold the land and building to a third party.The sales price was allocated so that the land was sold for $50,000 and the building was sold for $150,000.Income statements for Piglet and Sourgrape for the year ended December 31,2012 are summarized below:
Required:
Prepare the eliminating/adjusting entries related to the land and building on the consolidated working papers on the following dates:
1.December 31,2010
2.December 31,2011
3.December 31,2012

Question

Piglet Incorporated purchased 90% of the outstanding stock of Sourgrape Company several years ago at book value.At January 1,2010,Sourgrape sold land with a book value of $30,000 to Piglet at its fair market value of $40,000.At the same time,Sourgrape sold the building that was on the land to Piglet.The building had a book value of $80,000 and was sold at its fair value of $120,000.The building had a remaining useful life of 8 years and is depreciated using the straight-line method.The building has no salvage value.On January 1,2012,Piglet sold the land and building to a third party.The sales price was allocated so that the land was sold for $50,000 and the building was sold for $150,000.Income statements for Piglet and Sourgrape for the year ended December 31,2012 are summarized below:
  Required:
Prepare the eliminating/adjusting entries related to the land and building on the consolidated working papers on the following dates:
1.December 31,2010
2.December 31,2011
3.December 31,2012

Quizplus · Accepted Answer

The Answer of Piglet Incorporated purchased 90% of the outstanding stock of Sourgrape Company several years ago at book value.At January 1,2010,Sourgrape sold land with a book value of $30,000 to Piglet at its fair market value of $40,000.At the same time,Sourgrape sold the building that was on the land to Piglet.The building had a book value of $80,000 and was sold at its fair value of $120,000.The building had a remaining useful life of 8 years and is depreciated using the straight-line method.The building has no salvage value.On January 1,2012,Piglet sold the land and building to a third party.The sales price was allocated so that the land was sold for $50,000 and the building was sold for $150,000.Income statements for Piglet and Sourgrape for the year ended December 31,2012 are summarized below:
  Required:
Prepare the eliminating/adjusting entries related to the land and building on the consolidated working papers on the following dates:
1.December 31,2010
2.December 31,2011
3.December 31,2012

Piglet Incorporated Purchased 90% of the Outstanding Stock of Sourgrape