Question
On January 2, 2015, P Company sold a piece of equipment to its 80% subsidiary S Company. The equipment originally cost P Company $50,000 and
On January 2, 2015, P Company sold a piece of equipment to its 80% subsidiary S Company. The equipment originally cost P Company $50,000 and had accumulated Depreciation of $20,000. P sold it to S for $35,000. It has a remaining useful life of 5 years. P uses the cost method to record its investment in S. Assume that S Company sells the equipment for $20,000 to a third party after it has owned the equipment for three years. What is S Company's gain and the consolidated gain from the sale?
| A. | $6,000 S Company's Gain; $8,000 Consolidated Gain | |
| B. | $6,000 S Company's Gain; $9,000 Consolidated Gain | |
| C. | $5,000 S Company's Gain; $9,000 Consolidated Gain | |
| D. | $5,000 S Company's Gain; $8,000 Consolidated Gain |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing Employee Hiring And Staffing
Authors: Kelli W. Vito
1st Edition
0894137034, 978-0894137037
