Test Bank For Advanced Accounting 12th Edition Beams et al.

Test Bank For Advanced Accounting 12th Edition Beams et al. Which of the following is correct? A) No consolidation working paper entry is required for this transaction in 2014. B) A consolidation working paper entry is required only if the subsidiary was less than 100% owned in 2014. C) A consolidation working paper entry is required each year that Sidd has the land. D) A consolidated working paper entry was required only if the land was held for resale in 2014. Answer: C Objective: LO1 Difficulty: Easy 2) The 2014 unrealized gain from the intercompany sale A) should be recognized in consolidation in 2014 by a working paper entry. B) should be eliminated from consolidated net income by a working paper entry that credits land for $14,000. C) should be eliminated from consolidated net income by a working paper entry that debits land for $14,000. D) should be eliminated from consolidated net income by a working paper entry that credits gain on sale of land for $14,000. Answer: B Objective: LO1 Difficulty: Easy 3) On January 1, 2014, Bigg Corporation sold equipment with a book value of $20,000 and a 10- year remaining useful life to its wholly-owned subsidiary, Little Corporation, for $30,000. Both Bigg and Little use the straight-line depreciation method, assuming no salvage value. On December 31, 2014, the separate company financial statements held the following balances associated with the equipment: Bigg Little Gain on sale of equipment $10,000 Depreciation expense $3,000 Equipment 30,000 Accumulated depreciation 3,000 A working paper entry to consolidate the financial statements of Bigg and Little on December 31, 2014 included a A) debit to equipment for $10,000. B) credit to gain on sale of equipment for $10,000. C) debit to accumulated depreciation for $1,000. D) credit to depreciation expense for $3,000