_{Preparing the [I] consolidation entries for sale of depreciable assetsEquity method}

_{Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $162,000, equipment that originally cost $184,000. The parent originally purchased the equipment on January 1, 2012, and depreciated the equipment assuming a 10-year useful life (straight-line with no salvage value). The subsidiary has adopted the parents 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). b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016.}

_{c. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation).}

_{d. Prepare the required [l] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment).}

_{e. How long must we continue to make [I] consolidated entries?}