Prey Corporation created a wholly owned subsidiary, Sage Corporation, on January 1, 2013, at which time Prey sold land with a book value of $90,000 to Sage at its fair market value of $140,000. Also, on January 1, 2013, Prey sold to Sage equipment with a book value of $130,000 and a selling price of $165,000. The equipment had a remaining useful life of 4 years and is being depreciated under the straight-line method. The equipment has no salvage value. On January 1, 2015, Sage resold the land to an outside entity for $150,000. Sage continues to use the equipment purchased from Prey. Income statements for Prey and Sage for the year ended December 31, 2015 are summarized below:
Required:
At what amounts did the following items appear on the consolidated income statement for Prey and Subsidiary for the year ended December 31, 2015?
1. Gain on Sale of Land
2. Depreciation Expense
3. Consolidated net income
4. Controlling interest share of consolidated net income

Question

Prey Corporation created a wholly owned subsidiary, Sage Corporation, on January 1, 2013, at which time Prey sold land with a book value of $90,000 to Sage at its fair market value of $140,000. Also, on January 1, 2013, Prey sold to Sage equipment with a book value of $130,000 and a selling price of $165,000. The equipment had a remaining useful life of 4 years and is being depreciated under the straight-line method. The equipment has no salvage value. On January 1, 2015, Sage resold the land to an outside entity for $150,000. Sage continues to use the equipment purchased from Prey. Income statements for Prey and Sage for the year ended December 31, 2015 are summarized below:
  Required:
At what amounts did the following items appear on the consolidated income statement for Prey and Subsidiary for the year ended December 31, 2015?
1. Gain on Sale of Land
2. Depreciation Expense
3. Consolidated net income
4. Controlling interest share of consolidated net income

Quizplus · Accepted Answer

The Answer of Prey Corporation created a wholly owned subsidiary, Sage Corporation, on January 1, 2013, at which time Prey sold land with a book value of $90,000 to Sage at its fair market value of $140,000. Also, on January 1, 2013, Prey sold to Sage equipment with a book value of $130,000 and a selling price of $165,000. The equipment had a remaining useful life of 4 years and is being depreciated under the straight-line method. The equipment has no salvage value. On January 1, 2015, Sage resold the land to an outside entity for $150,000. Sage continues to use the equipment purchased from Prey. Income statements for Prey and Sage for the year ended December 31, 2015 are summarized below:
  Required:
At what amounts did the following items appear on the consolidated income statement for Prey and Subsidiary for the year ended December 31, 2015?
1. Gain on Sale of Land
2. Depreciation Expense
3. Consolidated net income
4. Controlling interest share of consolidated net income

Prey Corporation Created a Wholly Owned Subsidiary, Sage Corporation, on January