Separate income statements of Plantation Corporation and its 90%-owned subsidiary, Savannah Corporation, for 2014 are as follows, prior to Plantation recording any income related to its subsidiary:
Additional information:
1. Plantation acquired its 90% interest in Savannah Corporation when the book values were equal to the fair values.
2. The gain on equipment relates to equipment with a book value of $95,000 and a 7-year remaining useful life that Plantation sold to Savannah for $130,000 on January 1, 2014. The straight-line depreciation method was used and the equipment has no salvage value.
3. On January 1, 2014, Savannah sold land to an outside entity for $90,000. The land was acquired from Plantation in 2009 for $70,000. The original cost of the land to Plantation was $45,000.
4. Savannah did not declare or distribute dividends in 2014.
Required:
1. Prepare elimination/adjusting entries on the consolidated worksheet for the year 2014.
2. Prepare the consolidated income statement for the year ended December 31, 2014.

Question

Separate income statements of Plantation Corporation and its 90%-owned subsidiary, Savannah Corporation, for 2014 are as follows, prior to Plantation recording any income related to its subsidiary:
  Additional information:
1. Plantation acquired its 90% interest in Savannah Corporation when the book values were equal to the fair values.
2. The gain on equipment relates to equipment with a book value of $95,000 and a 7-year remaining useful life that Plantation sold to Savannah for $130,000 on January 1, 2014. The straight-line depreciation method was used and the equipment has no salvage value.
3. On January 1, 2014, Savannah sold land to an outside entity for $90,000. The land was acquired from Plantation in 2009 for $70,000. The original cost of the land to Plantation was $45,000.
4. Savannah did not declare or distribute dividends in 2014.
Required:
1. Prepare elimination/adjusting entries on the consolidated worksheet for the year 2014.
2. Prepare the consolidated income statement for the year ended December 31, 2014.

Quizplus · Accepted Answer

The Answer of Separate income statements of Plantation Corporation and its 90%-owned subsidiary, Savannah Corporation, for 2014 are as follows, prior to Plantation recording any income related to its subsidiary:
  Additional information:
1. Plantation acquired its 90% interest in Savannah Corporation when the book values were equal to the fair values.
2. The gain on equipment relates to equipment with a book value of $95,000 and a 7-year remaining useful life that Plantation sold to Savannah for $130,000 on January 1, 2014. The straight-line depreciation method was used and the equipment has no salvage value.
3. On January 1, 2014, Savannah sold land to an outside entity for $90,000. The land was acquired from Plantation in 2009 for $70,000. The original cost of the land to Plantation was $45,000.
4. Savannah did not declare or distribute dividends in 2014.
Required:
1. Prepare elimination/adjusting entries on the consolidated worksheet for the year 2014.
2. Prepare the consolidated income statement for the year ended December 31, 2014.

Separate Income Statements of Plantation Corporation and Its 90%-Owned Subsidiary