Problem 5-4</p><p>Eliminating Entries (including Goodwill Impairment) and Worksheets for Various Years LO1 LO6 On January 1, 2010,
Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At the time, Salem Company had capital
stock of $550,000 and retained earnings of $80,000.</p><p> Differences between the fair value and the book value of the identifiable
assets of Salem Company were as follows:</p><p>
Fair Value in Excess of
Book
Value</p><p>Equipment
$130,000</p><p>Land
65,000</p><p>Inventory
40,000</p
><p>The book values of all other assets and liabilities of Salem Company were equal to their fair value on January 1, 2010. The equipment
had a remaining life of five years on January 1, 2010. The inventory was sold in 2010. Salem Company's net income and dividends declared
in 2010 and 2011 were as follows:</p><p>Year 2010 Net Income of $100,000; Dividends Declared of $25,000</p><p>Year 2011 Net
Income of $110,000; Dividends Declared of $35,000</p><p>a.
Prepare a computation and Allocation Schedule for the difference
between book value of equity acquired and the value implied by the purchase price.</p><p>b.
Present the eliminating / adjusting entries
needed on the consolidated worksheet for the year ended December 31, 2010. (It is not necessary to prepare the
worksheet.)</p><p>1.
Assume the use of the cost method.</p><p>2.
Assume the use of the partial equity
method</p><p>3.
Assume the use of the complete equity method.</p><p>c.
Present the eliminating / adjusting entries needed on the
consolidated worksheet for the year ended December 31, 2011(It is not necessary to prepare the worksheet.)</p><p>1.
Assume the use of
the cost method.</p><p>2.
Assume the use of the partial equity method</p><p>3.
Assume the use of the complete equity
method.</p><p>Use the following financial data for 2012 for requirements D through
G.</p><p>
Porter Company
Salem
Company</p><p>Sales
$1,100,000
$450,000</p><p>Dividend
income
48,000
---</p><p> Total
revenue
$1,148,000
$450,000</p><p>Cost of goods
sold
900,000
200,000</p><p>Depreciation
expense
40,000
30,000</p><p>Other
expenses
60,000
50,000</p><p> Total cost and
expense
1,000,000
280,000</p><p>Net
income
$148,000
$170,000</p><p> </p><p>1/1 Retained
earnings
$500,000
$230,000</p><p>Net
income
148,000
170,000</p><p>Dividends
declared
(90,000)
(60,000)
</p><p>12/31 Retained
earnings
$558,000
$340,000</p><p> </p><p>Cash
$ 70,000
$ 65,000</p><p>Accounts
receivable
260,000
190,000
</p><p>Inventory
240,000
175,000
</p><p>Investment in Salem
Company
850,000</p><p>Land
-0-
320,000</p><p>Plant and
equipment
360,000
280,000</p><p> Total
assets
$ 1,780,000
$1,030,000</p><p> </p><p>Accounts
payable
$ 132,000
$ 110,000
</p><p>Notes
payable
90,000
30,000</p><p>Capital
stock
1,000,000
550,000</p><p>Retained
earnings
558,000
340,000</p><p> Total liabilities and
equity
$1,780,000
$1,030,000</p><p>d.
Prepare a consolidated financial statements work paper
for the year ended December 31, 2012. Although no goodwill impairment was reflected at the end of 2010 or 2011, the goodwill impairment
test conducted at December 31, 2012 revealed implied goodwill from Salem to be only $150,000. The impairment has not been recorded in
the books of the parent. (Hint: You can infer the method being used by the parent from the information in its trial
balance.)</p><p>e.
Prepare a consolidated statement of financial position and a consolidated income statement for the year ended
December 31, 2012. Describe the effect on the consolidated balance if Salem Company uses the LIFO cost flow assumption in pricing its
inventory and there has been no decrease in ending inventories since 2010. Prepare an analytical calculation of consolidated retained
earnings for the year ended December 31, 2012
Problem 5-6 Work paper Entries for Two Years and Sale Equipment in Year Two LO6 On January 1, 2011, Perini Company purchased an
85% interest in Silvas Company for $400,000. On this date, Silvas Company had common stock of $90,000 and retained earnings of
$210,000. An examination of Silvas Company's assets and liabilities revealed that there book value was equal to their fair value except for
the
equipment.</p><p>
Book Value
Fair
Value</p><p>Equipment
$360,000
</p><p>Accumulated
depreciation
<u>(120,000)</u></p><p>
$240,
000
$340,000</p><p> </p><p>The equipment had an expected remaining life of six years and no salvage value. Straightline
depreciation is used.</p><p>During 2011 and 2012, Perini Company reported net income from its own operations of $80,000 ND Paid
dividends of $50,000 in each year. Silvas Company had income of $40,000 each year and paid dividends of $30,000 on each December
31.</p><p>Accumulated depreciation is presented on a separate row in the workpaper and in the consolidated financial
statements.</p><p> Prepare eliminating entries for consolidated financial statements workpaper for the year ended December 31, 2011,
assuming:</p><p>1.
The cost method is used to account for the investment.</p><p>2.
The partial equity method is used to account
for the investment.</p><p>b.
On January 1, 2012, Silvas Company sold all its equipment for $220,000. Prepare the eliminating entries
for the consolidated financial statements workpaper for the year ended December 31, 2012, assuming:</p><p>1.
The cost method is used
to account for the investment.</p><p>2.
The partial equity method is used to account for the investment
P5-4)
Part A
Computation and Allocation of Difference Schedule
Parent
Share
Purchase price and implied value
Less: Book value of equity acquired
Difference between implied and book value
Equipment
Land
Inventory
Balance
Goodwill
Balance
$850,000
504,000
346,000
(104,000)
(52,000)
(32,000)
158,000
(158,000)
-0-
NonControlling
Share
212,500
126,000
86,500
(26,000)
(13,000)
(8,000)
39,500
(39,500)
-0-
Entire
Value
1,062,500 *
630,000
432,500
(130,000)
(65,000)
(40,000)
197,500
(197,500)
-0-
*$850,000/.80
Part B and C – Worksheet Entries
Cost Method Workpaper entries – Year 2010
(1) Dividend Income ($25,000.80)
Dividends Declared
To eliminate intercompany dividends
(2) Beginning Retained Earnings - Salem Co.
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company
Noncontrolling Interest
To eliminate investment account and create noncontrolling interest account
(3) Cost of Goods Sold
20,000
20,000
80,000
550,000
432,500
850,000
212,500
40,000
Land
Plant and Equipment (5 year life)
Goodwill
Difference between Implied and Book Value
To allocate the difference between implied and book value
(4) Depreciation Expense ($130,000/5)
Plant and Equipment
Cost Method – Worksheet Entries – Year 2011
65,000
130,000
197,500
432,500
26,000
26,000
(1) Investment in Salem Company (.80($100,000 - $25,000))
Beginning Retained Earnings - Porter Co.
To establish reciprocity/convert to equity as of 1/1/2011
60,000
(2) Dividend Income ($35,000.80)
Dividends Declared
To eliminate intercompany dividends
28,000
60,000
28,000
(3) Beginning Retained Earnings - Salem Co.($80,000 + $100,000 – $25,000)
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company ($850,000 + $60,000)
Noncontrolling Interest ($212,500 + ($155,000 – $80,000).2)
To eliminate investment account and create noncontrolling interest account
155,000
550,000
432,500
(4) 1/1 Retained Earnings – Porter Company
Noncontrolling Interest
Land
Plant and Equipment (5 year life)
Goodwill
Difference between Implied and Book Value
To allocate the difference between implied and book value
32,000
8,000
65,000
130,000
197,500
(5) 1/1 Retained Earnings – Porter Company (previous year’s amount)
910,000
227,500
432,500
20,800
Noncontrolling Interest
Depreciation Expense ($130,000/5)
Plant and Equipment
Partial Equity Method Workpaper entries – Year 2010
(1) Equity in Subsidiary Income ($100,000)(.80)
Dividends Declared ($25,000.80)
Investment in Salem Company
To eliminate intercompany dividends
5,200
26,000
52,000
80,000
20,000
60,000
(2) Beginning Retained Earnings - Salem Co.
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company
Noncontrolling Interest
To eliminate investment account and create noncontrolling interest account
80,000
550,000
432,500
(3) Cost of Goods Sold
Land
Plant and Equipment (5 year life)
Goodwill
Difference between Implied and Book Value
To allocate the difference between implied and book value
40,000
65,000
130,000
197,500
(4) Depreciation Expense ($130,000/5)
Plant and Equipment
850,000
212,500
432,500
26,000
26,000
Partial Equity Method – Worksheet Entries – Year 2011
(1) Equity in Subsidiary Income ($110,000)(.80)
Dividends Declared ($35,000.80)
Investment in Salem Company
To eliminate intercompany dividends and income
88,000
28,000
60,000
(2) Beginning Retained Earnings - Salem Co.
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company ($850,000 + $80,000 – $20,000)
Noncontrolling Interest ($212,500 + ($155,000 – $80,000).2)
To eliminate investment account and create noncontrolling interest account
155,000
550,000
432,500
(3) 1/1 Retained Earnings – Porter Company
Noncontrolling Interest
Land
Plant and Equipment (5 year life)
Goodwill
Difference between Implied and Book Value
To allocate the difference between implied and book value
32,000
8,000
65,000
130,000
197,500
(4) 1/1 Retained Earnings – Porter Company (previous year’s amount)
Noncontrolling Interest
Depreciation Expense ($130,000/5)
Plant and Equipment
Complete Equity Method Workpaper entries – Year 2010
(1) Equity in Subsidiary Income ($100,000)(.80) – $32,000 – $20,800
Dividends Declared ($25,000.80)
Investment in Salem Company
To eliminate intercompany dividends
(2) Beginning Retained Earnings - Salem Co.
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company
Noncontrolling Interest
To eliminate investment account and create noncontrolling interest account
(3) Cost of Goods Sold
910,000
227,500
432,500
20,800
5,200
26,000
52,000
27,200
20,000
7,200
80,000
550,000
432,500
850,000
212,500
40,000
Land
Plant and Equipment (5 year life)
Goodwill
Difference between Implied and Book Value
To allocate the difference between implied and book value
(4) Depreciation Expense ($130,000/5)
Plant and Equipment
65,000
130,000
197,500
432,500
26,000
26,000
Complete Equity Method – Worksheet Entries – Year 2011
(1) Equity in Subsidiary Income ($110,000)(.80) - $20,800
Dividends Declared ($35,000.80)
Investment in Salem Company
To eliminate intercompany dividends and income
67,200
28,000
39,200
(2) Beginning Retained Earnings - Salem Co. ($80,000 + $75,000)
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company ($850,000 + $80,000 – $20,000)
Noncontrolling Interest ($212,500 + ($155,000 – $80,000).2)
To eliminate investment account and create noncontrolling interest account
155,000
550,000
432,500
(3) Investment in Salem Company
Noncontrolling Interest
Land
Plant and Equipment (5 year life)
Goodwill
Difference between Implied and Book Value
To allocate the difference between implied and book value
32,000
8,000
65,000
130,000
197,500
(4) Investment in Salem Company
Noncontrolling Interest
910,000
227,500
432,500
20,800
5,200
Depreciation Expense ($130,000/5)
Plant and Equipment
26,000
52,000
Porter
Company
Part D
Income Statement
Sales
Dividend Income
Total Revenue
Cost of Goods Sold
Depreciation Expense
Impairment loss
Other Expenses
Total Cost and Expense
Net/Consolidated Income
Salem
Company
$1,100,000 $450,000
48,000
(2)
1,148,000 450,000
900,000 200,000
40,000
30,000 (4b)
(5)
60,000
50,000
1,000,000 280,000
148,000 170,000
Noncontrolling Interest in Consolid. Income*
Net Income to Retained Earnings
$148,000 $170,000
Retained Earnings Statement
1/1 Retained Earnings:
Porter Company
$500,000
Salem Company
Net Income from Above
Dividends Declared:
Porter Company
Salem Company
12/31 Retained Earnings to Balance Sheet
Balance Sheet
Cash
Eliminations
Debit
Credit
148,000
Noncontrolling Consolidated
Interest
Balances
$1,550,000
48,000
1,550,000
1,100,000
96,000
47,500
110,000
1,353,500
196,500
26,000
47,500
19,300
$19,300
$121,500
(4a)
(4b)
32,000
41,600
(1) $120,000
230,000 (3) 230,000
170,000
121,500
$546,400
19,300
(90,000)
(60,000)
$558,000 $340,000
Porter
Salem
Company Company
$70,000
$65,000
(19,300)
$177,200
177,200
(90,000)
(2)
$425,100
48,000
$168,000
Eliminations
Debit
Credit
(12,000)
$7,300
$633,600
Noncontrolling Consolidated
Interest
Balances
$135,000
Accounts Receivable
260,000
190,000
Inventory
240,000
175,000
Investment in Salem Company
850,000
(1)
Difference between Implied and Book Value
(3)
Land
320,000 (4a)
Plant and Equipment
360,000
280,000 (4a)
Goodwill
(4a)
Total Assets
$1,780,000 $1,030,000
$450,000
$415,000
120,000 (3)
432,500 (4a)
65,000
130,000 (4b)
197,500 (5)
970,000
432,500
385,000
692,000
150,000
$2,227,000
78,000
47,500
Accounts Payable
$132,000 $110,000
Notes Payable
90,000
30,000
Common Stock:
Porter Company
1,000,000
Salem Company
550,000 (3) 550,000
Retained Earnings from above
558,000
340,000
425,100
168,000
1/1 Noncontrolling Interest in Net
(4a)
8,000 (3) 242,500 **
Assets
(4b)
10,400
12/31 Noncontrolling Interest in Net
Assets
Total Liabilities and Equity
$1,780,000 $1,030,000
$1,938,500
$1,938,500
* Noncontrolling Interest in Income =.2  $170,000 – (.2 x $26,000) – (.2 x $47,500) = $19,300
** $212,500 + ($230,000 – $80,000) x .20 = $242,500
Explanations of workpaper entries are on the following page.
$242,000
120,000
1,000,000
7,300
224,100
633,600
$231,400
231,400
$2,227,000
Computation and Allocation of Difference Schedule
Parent
Share
Purchase price and implied value
Less: Book value of equity acquired
Difference between implied and book value
Equipment
Land
Inventory
Balance
Goodwill
Balance
$850,000
504,000
346,000
(104,000)
(52,000)
(32,000)
158,000
(158,000)
-0-
NonControlling
Share
212,500
126,000
86,500
(26,000)
(13,000)
(8,000)
39,500
(39,500)
-0-
Entire
Value
1,062,500
630,000
432,500
(130,000)
(65,000)
(40,000)
197,500
(197,500)
-0-
Explanations of Workpaper entries:
(1) Investment in Salem Company [.80  ($230,000 - $80,000)]
Beginning Retained Earnings - Porter Co.
To establish reciprocity/convert to equity method as of 1/1/12
(2) Dividend Income ($60,000.80)
Dividends Declared
To eliminate intercompany dividends
120,000
120,000
48,000
48,000
(3) Beginning Retained Earnings - Salem Co.
Common Stock - Salem
Difference between Implied and Book Value
Investment in Salem Company ($850,000 + $120,000)
Noncontrolling Interest
To eliminate the investment account and create noncontrolling interest account
5 – 10
230,000
550,000
432,500
970,000
242,500
(4a) Beginning Retained Earnings- Porter Company
Noncontrolling Interest
Land
Plant and Equipment
Goodwill
Difference between Implied and Book Value
32,000
8,000
65,000
130,000
197,500
432,500
(4b) Beginning Retained Earnings - Porter Company (two years)
Noncontrolling Interest (two years)
Depreciation Expense
Plant and Equipment
41,600
10,400
26,000
78,000
Alternative to entries (4a) and (4b)
(4) Beginning Retained Earnings - Porter Company a
Noncontrolling Interest b
Depreciation Expense
Land
Plant and Equipment c
Goodwill
Difference between Implied and Book Value
To allocate and depreciate the difference between implied and book value
a
($32,000 + $20,800) + ($20,800) = $73,600
b
($8,000 + $5,200) + ($5,200) = $18,400
c
($130,000 - [3$26,000]) = $52,000
(5) Impairment Loss ($197,500 - $150,000)
Goodwill
To record goodwill impairment
73,600
18,400
26,000
65,000
52,000
197,500
432,500
47,500
47,500
5 – 11
Part E
PORTER COMPANY AND SUBSIDIARY
Consolidated Financial Statements
For the Year Ended December 31, 2012
Consolidated Income Statement
Sales
Cost of Goods Sold
Gross Profit
Expenses:
Depreciation Expense
Impairment Loss
Other Expenses
Consolidated Income
Noncontrolling Interest in Consolidated Income
Net Income
$1,550,000
1,100,000
450,000
$96,000
47,500
110,000
Consolidated Statement of Retained Earnings
Retained Earnings - Beginning of Year
Add: Net Income
Less Dividends
Retained Earnings - End of Year
253,500
196,500
19,300
$177,200
$546,400
177,200
90,000
$633,600
PORTER COMPANY AND SUBSIDIARY
Consolidated Statement of Financial Position
December 31, 2012
Assets
Current Assets:
Cash
Accounts Receivable
Inventory
Noncurrent Assets:
Plant and Equipment (net)
$135,000
450,000
415,000
692,000
5 – 12
$1,000,000
723,600
Land
Goodwill
Total Assets
385,000
150,000
Liabilities And Stockholders' Equity
Liabilities:
Accounts Payable
Notes Payable
Total Liabilities
Stockholders' Equity
Noncontrolling Interest in Net Assets
Capital Stock
Retained Earnings
Total Liabilities and Stockholders' Equity
1,227,000
$2,227,000
$242,000
120,000
362,000
231,400
1,000,000
633,600
1,865,000
$2,227,000
Part F Ending inventory would be higher by $40,000 if LIFO is assumed because it would not have been sold. Beginning controlling
retained earnings and noncontrolling interest would also be $32,000 and $8,000 higher, because cost of goods sold in the year
of acquisition was lower.
Part G Porter Company's Retained Earnings on 12/31/12
Porter Company's Share of the Increase in Salem
Company's Retained Earnings from January 1, 2010 to December 31, 2012
($340,000 – $80,000).8
Cumulative Effect to December 31, 2012 of the Allocation and Depreciation
of the Difference between Implied and Book value (Parent’s share)
Allocated to:
2010
2011
2012
Inventory
$32,000
$0
$0
Equipment
20,800
20,800
20,800
$52,800 $20,800 $20,800
Goodwill Impairment (2012)
5 – 13
$558,000
208,000
(94,400)
(38,000)
Controlling Interest in Consolidated Retained Earnings on 12/31/12
$633,600
P5-6)
Computation and Allocation of Difference Schedule
Parent
Share
Purchase price and implied value
Less: Book value of equity acquired
Difference between implied and book value
Equipment*
Less:Accumulated Depreciation*
Balance
Goodwill
Balance
NonControlling
Share
70,588
45,000
25,588
(13,500)
4,500
16,588
(16,588)
-0-
$400,000
255,000
145,000
(76,500)
25,500
94,000
(94,000)
-0-
Entire
Value
470,588 *
300,000
170,588
(90,000)
30,000
110,588
(110,588)
-0-
*$400,000/.85
*Schedule of Book Value and Fair Value on Date of Acquisition
Equipment
Accumulated Depreciation
Equipment (net)
Fair
Value
$450,000 1
150,000 2
$300,000
Book
Value
$360,000
120,000
$240,000
Fair Value
Minus Book Value
$90,000 3
30,000 4
$60,000
1
$300,000/($240/$360) = $450,000
$450,000($120/$360) = $150,000
3
$60,000/($240/$360) = $90,000
2
5 – 14
4
$90,000($120/$360) = $30,000
Allocation of Difference between Implied and Book Value
Equipment (net)
Goodwill
Difference between Implied and Book Value
Annual
Amount
Amortization
$60,000/6 yr $10,000
110,588
0
$170,588
$10,000
Part A
Part 1 – Cost Method
(1) Dividend Income ($30,0000.85)
Dividends Declared
25,500
25,500
(2) Beginning Retained Earnings - Silvas Company
Common Stock - Silvas Company
Difference between Implied and Book Value
Investment in Silvas Company
Noncontrolling Interest
210,000
90,000
170,588
(3) Depreciation Expense
Equipment
Goodwill
Accumulated Depreciation - Equipment ($30,000 + $10,000)
Difference between Implied and Book Value
10,000
90,000
110,588
400,000
70,588
Alternative to entry (3)
(3a) Equipment
Goodwill
Accumulated Depreciation - Equipment
Difference between Implied and Book Value
40,000
170,588
90,000
110,588
30,000
170,588
5 – 15
Depreciation Expense
Accumulated Depreciation - Equipment
10,000
10,000
Part 2 – Partial Equity Method
(1) Equity in Subsidiary Income ($40,0000.85)
Dividends Declared ($30,0000.85)
Investment in Silvas Company
To eliminate intercompany dividends and income
34,000
25,500
8,500
(2) Beginning Retained Earnings - Silvas Company
Common Stock - Silvas Company
Difference between Implied and Book Value
Investment in Silvas Company
Noncontrolling Interest
210,000
90,000
170,588
(3) Depreciation Expense
Equipment
Goodwill
Accumulated Depreciation - Equipment ($30,000 + $10,000)
Difference between Implied and Book Value
10,000
90,000
110,588
400,000
70,588
Alternative to entry (3)
(3a) Equipment
Goodwill
Accumulated Depreciation - Equipment
Difference between Implied and Book Value
40,000
170,588
90,000
110,588
30,000
170,588
(3b) Depreciation Expense
10,000
5 – 16
Accumulated Depreciation - Equipment
10,000
Part B
Part 1 – Cost Method
Cost
Accumulated Depreciation
Undepreciated Basis
Sales Proceeds
Gain (Loss)
Silvas Company
$360,000
160,000
200,000
220,000
$ 20,000
(1) Investment in Silvas Company ($10,0000.85)
Beginning Retained Earnings - Perini Company
To establish reciprocity/convert to equity as of 1/1/2012
(2) Dividend Income ($30,0000.85)
Dividends Declared-Silvas Company
To eliminate intercompany dividends
Difference
$90,000
40,000
50,000
$50,000
Consolidated
$450,000
200,000
250,000
220,000
$(30,000)
8,500
8,500
25,500
25,500
(3) Beginning Retained Earnings-Silvas Co.
220,000
Common Stock -Silvas Company
90,000
Difference between Implied and Book Value
170,588
Investment in Silvas Company ($400,000 + $8,500)
408,500
Noncontrolling Interest ($70,588 + ($220,000 – $210,000) x .15)
72,088
To eliminate investment account and create noncontrolling interest account
(4) Beginning Retained Earnings-Perini Company
Noncontrolling Interest
8,500
1,500
5 – 17
Gain on Disposal of Equipment
Loss on Disposal of Equipment
Goodwill
Difference between Implied and Book Value
To allocate and depreciate difference between Implied and book value
Note: $20,000 Dr. to Gain + $30,000 Dr. to Loss =
Unamortized difference associated with equipment on date sold to
outsiders equals $60,000 - $10,000 =
20,000
30,000
110,588
170,588
$50,000
$50,000
Part B
Part 2 – Partial Equity Method
Cost
Accumulated Depreciation
Undepreciated Basis
Sales Proceeds
Gain (Loss)
Silvas Company
$360,000
160,000
200,000
220,000
$20,000
Difference
$90,000
40,000
50,000
$50,000
Consolidated
$450,000
200,000
250,000
220,000
$(30,000)
(1) Equity in Subsidiary Income ($40,0000.85)
Investment in Silvas Company
To eliminate intercompany dividends and income
34,000
(2) Investment in Silvas Company
Dividends Declared-Silvas Company ($30,0000.85)
To eliminate intercompany dividends
25,500
34,000
(3) Beginning Retained Earnings-Silvas Co.
Common Stock -Silvas Company
Difference between Implied and Book Value
25,500
220,000
90,000
170,588
5 – 18
Investment in Silvas Company ($400,000 + $8,500)
Noncontrolling Interest ($70,588 + ($220,000 – $210,000) x .15)
To eliminate investment account and create noncontrolling interest account
(4)
Beginning Retained Earnings-Perini Company
Noncontrolling Interest
Gain on Disposal of Equipment
Loss on Disposal of Equipment
Goodwill
Difference between Implied and Book Value
To allocate and depreciate difference between implied and book value
8,500
1,500
20,000
30,000
110,588
Note: $20,000 Dr. to Gain + $30,000 Dr. to Loss =
Unamortized difference associated with equipment on date sold to
outsiders equals $60,000 - $10,000 =
$50,000
5 – 19
408,500
72,088
170,588
$50,000