Lobes CoOwns 65% of Banes Limited

question 21

Essay

Lobes Co.owns 65% of Banes Limited.During 20X5,Banes sold equipment to Lobes for a gain of $150,000,recognizing a gain on sale (before taxes)of $75,000.Lobes has determined that the equipment had a useful life of 10 years,and took a full year's deprecation in 20X5.On April 1,20X8,Lobes sold the equipment to an unaffiliated company for $110,000.Ignore any taxes.
Required:
Prepare the appropriate consolidation adjustments relating to the equipment for each year ending December 31,20X5 to 20X8.

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Definitions:

Standard Cost Formula

A predetermined cost of manufacturing a single unit or a number of product units during a specific period under normal conditions, used for budgeting and cost control.

Total Cost

The aggregate amount of all costs involved in producing a product or delivering a service, including direct materials, labor, and overhead expenses.

Indirect Manufacturing Cost

Costs in manufacturing that are not directly traceable to individual products, such as maintenance, utilities, and factory supervision.

Conversion Costs

The combined costs of direct labor and manufacturing overheads involved in transforming raw materials into finished goods.