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

question 21

Essay

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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Definitions:

Status

The relative rank, prestige, or social standing of an individual or group within a society or organizational hierarchy.

Security

Measures and protocols implemented to protect people, property, or information from threats and unauthorized access.

Dissatisfiers

Factors which, when present, can cause dissatisfaction among employees or consumers, but whose absence does not necessarily lead to satisfaction.

Frederick Herzberg

A psychologist best known for developing the Motivation-Hygiene Theory, which differentiated between motivators that increase job satisfaction and hygiene factors that, if absent, can cause dissatisfaction.