Question
On January 1, 20X9, Polly Corporation sold a machine for $900,000 to Sue Inc., it's wholly owned subsidiary. Polly paid $1,100,000 for the machine, which
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On January 1, 20X9, Polly Corporation sold a machine for $900,000 to Sue Inc., it's wholly owned subsidiary. Polly paid $1,100,000 for the machine, which had accumulated depreciation of $250,000 at the time of the sale. Polly believed the machine had a salvage value of $100,000 and used straight line depreciation with a useful life of 20 years. Sue will continue using the same methodology. In Polly's December 31, 20X9 consolidated balance sheet, this machine should be included in fixed assets with what cost and accumulated depreciation?
a. Cost: $1,100,000
Accumulated depreciation: $290,000
b. Cost: $850,000
Accumulated depreciation: $42,500
c. Cost: $1,100,000
Accumulated depreciation: $300,000
d. Cost: $900,000
Accumulated depreciation: $42,500
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