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34. Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume on January 1,2020 , a wholly owned subsidiary sells to its parent,
34. Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume on January 1,2020 , a wholly owned subsidiary sells to its parent, for a sale price of $88,000, equipment that originally cost $120,000. The subsidiary originally purchased the equipment on January 1,2016 , and depreciated the equipment assuming a 12 -year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2020 . c. Prepare the required [I] consolidation entry in 2020. (Assume a full year of depreciation.) d. Now assume you are preparing the year-end consolidation entries for the year ending December 31, 2022. Prepare the required [I] consolidation entries during the holding period. e. How long must we continue to make the [I] consolidation entries
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