Tribbs has completed the purchase of Quicker. During the previous year, Tribbs sells a wrapping machine to Quicker. The details include the following:
- Tribbs purchased the equipment on 6/30/02 and sold it on 6/30/05.
- Original purchase price is $160,000; depreciation under 7 years in the Modified Accelerated Cost Recovery System (MACRS) is $80,000.
- The sale price to Quicker is $90,000.
- Quicker's profit for the year is $110,000, which includes $1,000 of depreciation from the excess of selling price to Quicker over the original cost of the equipment to Tribbs.
Write a report to Bob including the following information:
-Tribbs' calculation of gain
-To record the transaction:
Tribbs' journal entry
Quicker's journal entry
-Consolidated worksheet entry at 12/31/05
The investment of Tribbs on Quicker's equity resulted to the evaluation of the accounting treatment of Tribb's sale of a wrapping machine to Quicker in the previous year which is still being used by Quicker. This usage complicates the accounting treatment for this ...
The following problem helps with questions regarding company purchases and mergers.