On January 1, 2019, Deer Inc., a 90% owned subsidiary of Bear Co., sold equipment with a five-year remaining life to Bear Co. in exchange for $97,000 cash. Bear uses the equity method to account for this investment. The equipment originally cost $105,000 and a total of $31,500 of accumulated depreciation has been recorded when transferred. Depreciation expense was calculated using the straight-line method with no salvage value. Requirement: 1. What is the amount of gain on sale of equipment that the seller would have recorded on Jan. 1. 2019? (3 points) Answer: 2. What is the amount of annual excess depreciation (ED) resulting from this intra- entity transaction? (3 points) Answer: A/ *TA for 2020 ie year 2) to 3. Find the two missing amounts in the consolidation "TA for 2020 (i.e., year 2) to adjust the effect of this intra-entity equipmegt sale. (3 points for (1) and 2.5 points for (2) Credit Account titles Retained earnings, Deer Inc., 1/1, 2020 Equipment Accumulated Depreciation Debit (1) ? (2) ? Answer (1): A (2): AN Previous Page Next Page Page 19 of 20 a O 3