Question
Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On January 1, 20X8, Mortar received $350,000 from Granite for
Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On January 1, 20X8, Mortar received $350,000 from Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000. The equipment is expected to have a 10-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis. In the preparation of elimination entries related to the equipment transfer for the 20X9 consolidated financial statements, net effect on accumulated depreciation will be:
Select one:
a. an increase of $110,000.
b. a decrease of $100,000.
c. a decrease of $110,000.
d. an increase of $100,000
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