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On January 1, 2020 P Corporation acquired 70% of the voting common stock of S Co. at a time when S Co.'s book values
On January 1, 2020 P Corporation acquired 70% of the voting common stock of S Co. at a time when S Co.'s book values and fair values were equal, except for a equipment which has a fair value of 50,000 more than its book value and with remaining life of 5 years. Separate income statement of P Corporation and S Co. for 2020 are as follows: P Corporation S Corporation Sales P 660,000 P 365,000 Dividend income 42,000 Cost of Goods Sold 400,000 200,000 Operating expenses 295,000 100.000 Gain on sale of equipment 150,000 Separate incomes P 157,000 P 65,000 Intercompany sales from P to S for 2019 and 2020 are summarized as follows: Cost Selling Price Unsold at year-end Intercompany sales - 2019 P 250,000 P 300,000 30% Intercompany sales - 2020 P 175,000 P 250,000 40% Also on January 3, 2020, P Corporation sold equipment (with original cost of P750,000 and carrying cost of P375,000) to S Co. for P525,000. The equipment have a remaining life of three years and was depreciated using the straight-line method by both companies. Depreciation expense on the consolidated income statement of the equipment sold to S Co.?
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