On January 1, 20X2, Red Company purchased a computer with an expected economic life of five years. On January 1, 20X4, Red sold the computer to Blue Company and recorded the following entry:

Cash $39,000

Accumulated Depreciation $16,000

Computer Equipment $40,000

Gain on Sale of Equipment $15,000

Red holds 60 percent of Bluess voting share, acquired at book value. Blue reported net income of $30,000, and Red reported net income (including the gain on sale of equipment) of $100,000 for 20X4. There is no change in estimated economic life of the equipment as a result of the intercompany transfer.

Answer the following questions

In the preparation of the 20X4 consolidated income statement, will depreciation expense be debited or credited? For how much?

In the preparation of the 20X4 consolidated balance sheet, will computer equipment be debited or credited? For how much?

How much is Reds reported operating income on its own separate books for 20X4?

How much is consolidated net income for 20X4?