Preparing the $[$I$]$ consolidation entries for sale of depreciable assets$$Equity method

Assume that on January $1,2019,$ a parent sells to its wholly owned subsidiary, for a sale price of $$243,000,$ equipment that originally cost $$276,000.$ The parent originally purchased the equipment on January $1,2015,$ 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 $6$ years. The parent uses the equity method to account for its Equity Investment.

a$.$ Compute the annual pre$-$consolidation depreciation expense for the subsidiary $($post$-$intercompany sale$)$ and the parent $($pre$-$intercompany sale$).$

Subsidiary $-$ depreciation $Answer

Parent $-$ depreciation $Answer

b$.$ Compute the pre$-$consolidation Gain on Sale recognized by the parent during $2019.$

$Answer

c$.$ Prepare the required $[$I$]$ consolidation entry in $2019($assume a full year of depreciation$).$

Description Debit Credit

$[$lgain$]$ Equipment

$[$ldep$]$

d$.$ Prepare the required $[$l$]$ consolidation entry in $2022($assuming the subsidiary is still holding the equipment$).$

Description Debit Credit

$[$lgain$]$ Equipment

$[$ldep$]$

d$.$ Prepare the required $[$l$]$ consolidation entry in $2022($assuming the subsidiary is still holding the equipment$).$

Description Debit Credit

$[$lgain$]$ Equipment

$[$ldep$]$