Papa industries manufactures heavy equipment used in construction and excavation. On 3 January, 2016. Papa sold a piece of equipment form its inventory that cost $360,000 to its 60 percent-owned subsidiary, Kiddy Corporation, at Papas standard price of twice its cost. Kiddy is depreciating the equipment over six years using straight-line depreciation and no residual value.

Required:

a.Determine the net amount at which this equipment will be included in the consolidated balance sheets for Papa Industries and Subsidiary at December 31, 2016 and 2017.

b.Prepare the consolidated work paper entries related to this inter-company sale that are necessary to consolidate the financial statements of Papa and Kiddy at December 31, 2106 and 2017.