Andrea Co. acquired 70% of Calabrese Co. on January 1, 2016. At the date of acquisition, the excess acquisition price was allocated partly to undervalued building of $108,000 (6-year remaining life) and undervalued capitalized software of $860,000 (20-year remaining life). The remaining excess was allocated to goodwill of $130,000.

Various Intra-Entity Transactions Were Recorded by the Related Companies:

On February 13, 2018, Andrea Co. sold land to Calabrese Co. for $1,200,000 cash. The land had been acquired by Andrea Co. in 1987 for $380,000. On March 1, 2020, Calabrese Co. sold the land to unaffiliated buyers for $1,320,000.

On January 1, 2019, Andrea sold equipment to Calabrese Co. for $140,000. The equipment had been acquired by Andrea in 2015 at a cost of $120,000 and had a remaining book value of $100,000 at the date of transfer. The equipment had a remaining useful life of 10 years.

In 2018 through 2020, Andrea transferred finished goods to Calabrese Co. Note: Round all gross profit rates to the nearest 100th.

Period Cost Transfer Price Unsold Goods at Year-end*

2018 $ 50,000 $ 70,000 $ 12,000

2019 $ 60,000 $ 100,000 $ 30,000

2020 $ 90,000 $ 120,000 $ 50,000

*The ending inventories are at transfer price.

25. Using data in Exhibit 5 above, given the inter-entity transactions, what would be the consolidated balance of Depreciation Expense at the end of 2020?

A. $80,000.

B. $72,000.

C. $84,000.

D. $76,000.

Exhibit 5: Worksheet for Income Statement (partial) (2020) Income Statement (selected) Parent Subsidiary Debit Credit NCI Consolidated Depreciation Expense 48,000 32,000