Answers provided. Please explain the calculations. On April 1, 2020, Republic Company sold equipment to...
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Answers provided. Please explain the calculations.
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life.
Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively.
37. What was the amount of the credit to depreciation expense on the 2020 consolidation worksheet? Answer = $750
38. What was the amount of the credit to depreciation expense on the 2021 consolidation worksheet? Answer = $1,000
39. Assume Republic uses the equity method to account for its investment in Barre. What is the balance in the pre-consolidation Income (loss) from Subsidiary account for 2020? Answer = $245,750
40. Assume that Republic uses the equity method to account for its investment in Barre. What is the balance in the pre-consolidation Income (loss) from Subsidiary account for 2021? Answer = $271,000
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