*Downstream Depreciable Assets transaction
On January 1, 2021, Penn Company purchased 80% of the outstanding common shares of Senn Company.
On January 2 2021, Penn Company sold equipment with an original cost of $2,000 and a carrying value of $1,200 to Senn Co for $1,500.
Penn Co. had owned the equipment for two years and used a five-year straight line depreciation with no residual value.
Senn Co. is using straight-line depreciation over three years with no residual value.
Prepare eliminating (consolidation) entries for intercompany transactions on December 31, 2021.
(1) Elimination of excess depreciation because of the sales of equipment