On January 1, 2021, Musial Corp. sold equipment to Matin Inc. (a wholly-owned subsidiary) for $175,000 in cash. The equipment originally cost $150,000 and accumulated depreciation of $50,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method.

• Calculate the Gain on Sale of Equipment and prepare the journal entry for the seller (sale of equipment) and buyer (purchase of the equipment)

Buyer

Seller

• Prepare the consolidated journal entry to remove the gain and adjust all accounts necessary

• Calculate the excess depreciation and prepare the consolidated journal entry to remove the excess depreciation