Assume that on January $1,2019,$ a parent sells to its wholly owned subsidiary, for a sale price of $$243,000,$ equipment that originally cost $$276,000.$ The parent originally purchased the equipment on January $1,2015,$ and depreciated the equipment assuming a $10-$year useful life $($straight$-$line with no salvage value$).$ The subsidiary has adopted the parent$$s depreciation policy and depreciates the equipment over the remaining useful life of $6$ years. The parent uses the equity method to account for its Equity Investment.

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

Subsidiary $-$ depreciation $Answer $1$

Parent $-$ depreciation $Answer $2$

b$.$ Compute the pre$-$consolidation Gain on Sale recognized by the parent during $2019.$

$Answer $3$

c$.$ Prepare the required $[$I$]$ consolidation entry in $2019($assume a full year of depreciation$).$

Description Debit Credit

$[$lgain$]$ Equipment Answer $4$

Answer $5$

Answer $6$

Answer $7$

Answer $8$

Answer $9$

Answer $10$

Answer $11$

$[$ldep$]$ Answer $12$

Answer $13$

Answer $14$

Answer $15$

Answer $16$

Answer $17$

d$.$ Prepare the required $[$l$]$ consolidation entry in $2022($assuming the subsidiary is still holding the equipment$).$

Description Debit Credit

$[$lgain$]$ Equipment Answer $18$

Answer $19$

Answer $20$

Answer $21$

Answer $22$

Answer $23$

Answer $24$

Answer $25$

$[$ldep$]$ Answer $26$

Answer $27$

Answer $28$

Answer $29$

Answer $30$

Answer $31$