Grey Corp owns 100% of Blue Company. On January 1, 2017 Grey sold Blue a machine for $66,000. Immediately prior to the sale, the machine was recorded on Grey's books at a net book value of $25,000. Prior to the sale, Grey was depreciating the machine on a straight-line basis with 9 years of remaining life and no salvage value. Blue plans to adopt the same depreciation assumptions as Grey. What elimination adjustments with respect to this sale must be made to consolidated net income in 2018 (ignoring income tax effects)

Answer:

Journal 1 - Eliminate gain on sale :

Debit : Other Income  ($66,000 - $25,000)  $41,000

Credit : Machinery  $41,000

Journal 2 - Eliminate the unrealized profit from the sale :

Debit : Accumulated depreciation  $4,556

Credit : Depreciation $4,556

Explanation:

Grey Corp and Blue Company are in a group of Companies. Grey Corp is the Parent and should prepare Consolidated Financial Statements . Blue Company is a subsidiary (Grey owns more that 50 % of voting rights in Blue Company).

When preparing Consolidated Financial Statements, intragroup transaction must be eliminated. As they happen, a Company trades within its-self that is the reason they should be eliminated.

Concerning the sale of machine by Grey (Parent) to Blue (Subsidiary), we must first eliminate the Income (gain on sale) in Parent as well as the asset that sits in the Subsidiary.

Debit : Other Income  ($66,000 - $25,000)  $41,000

Credit : Machinery  $41,000

Also, we have to eliminate the unrealized profit on the  gain of the asset sold.

Debit : Accumulated depreciation  $4,556

Credit : Depreciation $4,556

Deprecation calculation :

Deprecation = $41,000 ÷ 9 = $4,556

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B. The scientific tariff was introduced, which allowed the president to increase tariff levels if foreign production costs were below those of the United States.
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Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. The par value is $100 per share.
Market: 11.7 percent expected return, risk-free rate of 3.75 percent, and a 23 percent tax rate.
Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %

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Plan assets at fair value, January 1 $640,000,000
Expected return on plan assets 54,000,000
Actual return on plan assets 44,000,000
Contributions to the pension fund (end of year) 94,000,000
Amortization of net loss 0
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Pension expense 64,000,000

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2. Notes payable (due in 6 to 11 months).
3. Sales taxes payable.
4. Bonus payable (to be paid in 60 days)
5. Warranty liability (6 months of coverage)
6. Prepaid Insurance (6 months of coverage)
7. Notes payable (due in 120 days).
8. Salaries payable.
9. Pension liability (to be fully paid to retired employees in next 11 months)
10. Bonds payable (due in 2 years)

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B. you have used money because the landlord accepted it as a means of payment.
C. the check is considered money because you received something in return.
D. the check becomes money when it arrives at the landlord's bank.
E. the check is not money because it is just an instruction to your bank to make a payment

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2. Issued common stock to investors for $138,050 cash.
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Assets = Liabilities + Stockholders' Equity
Cash + Inventory + Equipment = Accounts Payable + Common Stock + Retained
Earnings
(1)
(2)
(3)

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Municipal bond income $110000
Depreciation for tax purposes in excess of book depreciation $50000
Installment sales profit to be taxed in 2022 $152000
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Beginning work-in-process inventory:
Units in beginning work-in-process inventory 1,700
Materials costs $32,300
Conversion costs $18,700
Percent complete with respect to materials 70%
Percent complete with respect to conversion 25%
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Units transferred to the next department during the month 7,700
Materials costs added during the month $154,600
Conversion costs added during the month $253,900
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Units in ending work-in-process inventory 2,900
Percent complete with respect to materials 80%
Percent complete with respect to conversion 35%
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c. $31.78.
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