Preparing the [I] consolidation entries for sale of depreciable assets-Equity method Assume that on January 1, 2016, a parent sells to its wholly owned subsidiary, for a sale price of $121,500, equipment that originally cost $138,000. 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 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 (postintercompany sale) and the parent (pre-intercompany sale). Subsidiary - depreciation $ 13,800 X Parent-depreciations 20,250 X b. Compute the pre-consolidation Gain on Sale recognized by the parent during 2016, $ 38,700 0 C. Prepare the required [I] consolidation entry in 2016 (assume a full year of depreciation). Description Debit Credit [lgain] Equipment 38,700 x Gain on sale 16.500 X Accumulated depreciation 55,200 [leep) Accumulated depreciation 6,450 Depreciation expense 0 6,450 d. Prepare the required [I] consolidation entry in 2019 (assuming the subsidiary is still holding the equipment). Description Debit Credit [lgain) Equipment Gain on sale OX 0 Accumulated depreciation OX [ldep) Accumulated depreciation Depreciation expense OX OX 0 OX