Transfer of Depreciable Asset at Beginning of Year:
Frazer Corporation purchased 60 percent of Minnow Corporation's voting common stock on January 1, 20X1, at underlying book value. On January 1, 20X5, Frazer received $245,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $300,000. The truck is expected to have a 10-year useful life and no salvage value. Both companies depreciate trucks on a straight-line basis.
Required:
Q1. Give the workpaper eliminating entry or entries needed at December 31, 20X5, to remove the effects of the intercompany sale.
Q2. Give the workpaper eliminating entry or entries needed at December 31, 20X6, to remove the effects of the intercompany sale.