Smart Corporation is a 90%-owned subsidiary of Phan Inc.On January 2, 2016, Smart agreed to lease $400,000 of construction equipment from Phan for $3,000 a month on an operating lease.The equipment has a 10-year life and is being depreciated using the straight-line method.

Required:

Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-8 partial worksheet for December 31, 2016.Key and explain all eliminations and adjustments.

Question

Smart Corporation is a 90%-owned subsidiary of Phan Inc.On January 2, 2016, Smart agreed to lease $400,000 of construction equipment from Phan for $3,000 a month on an operating lease.The equipment has a 10-year life and is being depreciated using the straight-line method.
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Required:
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Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-8 partial worksheet for December 31, 2016.Key and explain all eliminations and adjustments.
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Quizplus · Accepted Answer

The Answer of Smart Corporation is a 90%-owned subsidiary of Phan Inc.On January 2, 2016, Smart agreed to lease $400,000 of construction equipment from Phan for $3,000 a month on an operating lease.The equipment has a 10-year life and is being depreciated using the straight-line method.
​
Required:
​
Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-8 partial worksheet for December 31, 2016.Key and explain all eliminations and adjustments.
​
​

Smart Corporation Is a 90%-Owned Subsidiary of Phan Inc