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Preparing the consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2012, a parent sells to its wholly owned subsidiary, for
Preparing the consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2012, a parent sells to its wholly owned subsidiary, for a sale price of $157, 500, equipment that originally cost $180,000. The parent originally purchased the equipment on January 1, 2009, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parent's depreciation policy and depreciates the equipment over the remaining useful life of 7 years. The parent uses the equity method to account for its Equity Investment. Compute the annual pre-consolidation depreciation expense for the subsidiary (post-intercompany sale) and the parent (pre-intercompany sale). Compute the pre-consolidation Gain on Sale recognized by the parent during 2012. Prepare the required consolidation entry in 2012 (assume a full year of depreciation). Prepare the required consolidation entry in 2016 (assuming the subsidiary is still holding the equipment). How long must we continue to make the consolidation entries
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