Farm Owns 70% of the Common Shares of XL and Accounts

question 32

Essay

Farm owns 70% of the common shares of XL and accounts for its investment using the cost method.In 20X6,Farm purchased equipment from XL for $300,000.The equipment had been purchased by XL for $420,000 in 20X2,had accumulated depreciation of $168,000 and a six-year remaining life at December 31,20X5.Both companies record a full year of depreciation expense in the year of the purchase and no depreciation in the year of a sale.
Required:
Indicate the consolidation adjustments to the following accounts for the years ended 20X6,20X8 and 20X11:
• depreciation expense
• net book value of equipment
• non-controlling interest on statement of comprehensive income
• non-controlling interest on statement of financial position
• retained earnings,end of year

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Definitions:

Merchandise Suppliers

Companies or individuals that provide products for sale to retailers, often involving wholesale transactions.

Long-Term Debt

Long-Term Debt comprises loans and financial obligations lasting more than one year, used by businesses to finance long-term investments or projects.

Inflow Of Cash

Money or cash equivalents coming into a business, typically from operations, investments, or financing activities.

Bond Payable

A financial instrument representing a loan made by an investor to a borrower, typically corporate or governmental, with a promise to pay back the principal along with interest on specified dates.