Leland Company has a policy of accounting for all plant assets of its branches in the accounting records of the home office. Contrary to this policy, the accountant for Davis Branch prepared the following journal entries for the equipment acquired by Davis Branch at the direction of the home office:

Prepare appropriate journal entries for Davis Branch and the home office on December 31, 2005, the end of the fiscal year, assuming that the home office had prepared no journal entries for the equipment acquired by the Davis Branch on August 1, 2005. Neither set of accounting records has been closed.

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2005 Aug. 1 Equipment Cash To record acquisition of equipment with an economic life of 10 years and a residual value of $2,000 Dec. 31 Depreciation Expense Accumulated Depreciation of Equipment To recognize depreciation of equipment by the straight-line method ($18,000 x 120 = $750). 20,000 20,000 750 750