E 6-5 General questions [Based on AICPA]

1. On January 1, 2016, Pam Company sold equipment to its wholly owned subsidiary, Sun Company, for $1,800.

The equipment cost Pam $2,000. Accumulated depreciation at the time of sale was $500. Pam was depreciating the equipment on the straight-line method over 20 years with no salvage value, a procedure that Sun continued.

On the consolidated balance sheet at December 31, 2016, the cost and accumulated depreciation, respectively, should be:

a $1,500 and $600 b $1,800 and $100 c $1,800 and $500 d $2,000 and $600