5 pierce manufacturing owns all of the outstanding voting common stock of sylvia com 4307645

5 pierce manufacturing owns all of the outstanding voting common stock of sylvia com 4307645

5) Pierce Manufacturing owns all of the outstanding voting common stock of Sylvia Company, as acquired several years ago when the book values and fair values of Sylvia's net assets were equal.

In 2010, Pierce set out to re-structure the company, and in doing so, re-aligned the manufacturing processes to streamline the use of automated equipment.  As a result, they set out to move certain equipment around between the facilities owned by both Pierce and Sylvia, and ultimately agreed on the following transfers and exchange prices.  It was agreed that the exchange price would be paid in cash on January 1, 2011, the date the equipment was transferred. Straight-line depreciation is used and the different pieces of equipment have no salvage value.

Transfer

Equipment

moved from

Equipment moved to

Original cost

Life Remain

(years)

Accum. deprec.(at transfer)

Exchange price

1

Pierce

Sylvia

100,000

10

52,500

50,000

2

Sylvia

Pierce

60,000

10

20,000

40,000

3

Pierce

Sylvia

120,000

8

72,000

40,000

4

Sylvia

Pierce

24,000

5

10,800

15,000

5

Pierce

Sylvia

35,000

5

12,500

25,000

6

Sylvia

Pierce

90,000

5

52,500

37,500

Required:

1. Prepare the journal entry that Pierce would record for each transfer listed.

2. Prepare the journal entry that Sylvia would record for each transfer listed.

3. Prepare the consolidation worksheet entries that would be required as a result of the above

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