Assume that on January $1,2011,$ a wholly owned subsidiary sells to its parent, for a sale price of $$129,000,$ equipment that originally cost $$152,000.$ The subsidiary originally purchased the equipment on January $1,2007,$ and depreciated the equipment assuming a $10-$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 $6$ years. The parent uses the full equity method to account for its Equity Investment.

a$.$ Compute the annual depreciation expense for the subsidiary $($pre$-$intercompany sale$)$ and the parent $($post$-$intercompany sale$).$

Annual depreciation expense$-$subsidiary Answer $1$

Annual depreciation expense$-$parent Answer $2$

b$.$ Compute the pre$-$consolidation Gain on Sale recognized by the subsidiary during $2011.$