(Module 1) On 1/3/06, Soytax (an 80%-owned subsidiary of Poytax) sold equipment costing $100,000 to Poytax for $45,000. At the time of the sale, the equipment had a book value of $20,000 (having been depreciated using the straight-line method, an original life of 10 years, and no estimated salvage value). Poytax continued depreciating the equipment by using the straight-line method but assigned a remaining life of 5 years. Soytax reported $500,000 of net income for 2007.
Required:
a. Prepare the general ledger entry or entries required at 12/31/07-not 12/31/06-under the complete equity method.
b. Prepare the consolidation entry or entries required at 12/31/07-not 12/31/06.

Question

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The Answer of (Module 1) On 1/3/06, Soytax (an 80%-owned subsidiary of Poytax) sold equipment costing $100,000 to Poytax for $45,000. At the time of the sale, the equipment had a book value of $20,000 (having been depreciated using the straight-line method, an original life of 10 years, and no estimated salvage value). Poytax continued depreciating the equipment by using the straight-line method but assigned a remaining life of 5 years. Soytax reported $500,000 of net income for 2007.
Required:
a. Prepare the general ledger entry or entries required at 12/31/07-not 12/31/06-under the complete equity method.
b. Prepare the consolidation entry or entries required at 12/31/07-not 12/31/06.

(Module 1) on 1/3/06, Soytax (An 80%-Owned Subsidiary of Poytax)