On January 1, 2022, Payton Co. sold equipment to its subsidiary, Starker Corp., for $116,000. The equipment had cost $130,000, and the balance in accumulated depreciation was $50,000. The equipment had an estimated remaining useful life of eight years and $0 salvage value. Both companies use straight-line depreciation. On their separate 2022 income statements, Payton and Starker reported depreciation expense of $84,000 and $60,000, respectively.

1. What is the TOTAL amount of depreciation expense on the consolidated income statement for 2022? (4 points)

2. At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2022? (4 points)

3. In preparing financial statements what elimination entry would be required for 2022? (8points)

4. In preparing financial statements what elimination entry would be required for 2023? (8 points)

Make sure you label each answer 1, 2, 3, 4. For each journal entry use DR for debits and CR for credits (don't rely on indents). Label as much as you can to be sure to get partial credit.