Pretty purchases all the common stock of Star at $10,000 more than book value in 20X1....
Pretty purchases all the common stock of Star at $10,000 more than book value in 20X1. All the differential relates to land that Star had purchased earlier for $25,000. Star than sells the land to an unrelated company for 32,000 in 20X2.
Questions:
- Give the book entry required by Pretty in relation to the sale of land.
- Give the consolidation entry required by Pretty in relation to the sale of land.
Homework Answers
1...Bank A/c. Dr. 32000
To Land A/C. 25000
To Gain on Sale of land A/C 7000
2.. Investment in star A/C. 7000
To Income from subsidiary 7000
Recording income from wholly subsidiary
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Pretty purchases all the common stock of Star at $10,000 more
than book value in 20X1....
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