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1. Water Company owns 80 percent of Fire Company’s outstanding common stock. On December 31, 20X9, Fire sold equipment to Water at a price in excess of Fire’s carrying amount but less than its original cost. On a consolidated balance sheet at December 31, 20X9, the carrying amount of the equipment should be reported at

2. Paragraph Corporation purchased land on January 1, 20X1, for $19,000. On June 10, 20X4, it sold the land to its subsidiary, Sentence Corporation, for $31,000. Paragraph owns 60 percent of Sentence’s voting shares.
 
Required:
a. Prepare the worksheet consolidation entries needed to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 20X4 and 20X5.

b. Prepare the worksheet consolidation entries needed on December 31, 20X4 and 20X5, if Sentence had initially purchased the land for $19,000 and then sold it to Paragraph on June 10, 20X4, for $31,000.

3. Power Corporation owns 75 percent of Swift Company’s stock. Swift provides health care services to its employees and those of Power. During 20X2, Power recorded $38,500 as health care expense for medical care given to its employees by Swift. Swift’s costs incurred in providing the services to Power were $34,500. (Leave no cells blank, enter "0" wherever required.)
 
Required:
a. By what amount will consolidated net income change when the intercompany services are eliminated in preparing Power’s consolidated statements for 20X2?

b. What would be the impact of eliminating the intercompany services on consolidated net income if Power owned 100 percent of Swift’s stock rather than 75 percent?

c. If in its consolidated income statement for 20X2 Power had reported total health care costs of $77,000, what was the cost to Swift of providing health care services to its own employees?