Info

Notes to Trial Balance:

(a) Includes machine purchased for $30,000 from Company P on January 1, 20X1.

(b) Includes $6,000 depreciation on machine purchased from Company P on January 1, 20X1.

Eliminations and Adjustments:

(CY1) Eliminate the entry recording the parent's share of subsidiary net income for the current year.

(EL) Eliminate 80% of the subsidiary equity balances against the investment account. There is no excess to be distributed. (F1) Eliminate the $10,000 gain on the intercompany sale of the machine, and reduce machine to book value. (F2) Reduce the depreciation expense and accumulated depreciation accounts to reflect the depreciation ($4,000 per year) based on the consolidated book value of the machine, rather than the depreciation ($6,000 per year) based on the sales price.

Worksheet 4-5 (see page 4-12)

Eliminations & Adjustments

Consolidated Income Statement

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