Preparing the [l] consolidation journal entries for sale of depreciable assets - Equity method Assume on January 1, 2017, a wholly owned subsidiary sells to its parent, for a sale price of $132,000, equipment that originally cost $180,000. The subsidiary originally purchased the equipment on January 1, 2013, and depreciated the equipment assuming a 12-year useful life (straight-line with no salvage value). The parent has adopted the subsidiary's depreciation policy and depreciates the equipment over the remaining useful life of 8 years. The parent uses the equity method to account for its Equity Investment. a. Compute the annual pre-consolidation depreciation expense for the subsidiary (pre-intercompany sale) and the parent (post-intercompany sale). Annual depreciation expense-subsidiary $ Annual depreciation expense-parent $ 15,600 X 22,000 X b. Compute the pre-consolidation Gain on Sale recognized by the subsidiary during 2017. $ 38,400 X C. Prepare the required [l] consolidation journal entry in 2017 (assume a full year of depreciation). Credit 0 Consolidation Worksheet Description [lgain] Gain on sale of equipment Equipment Accumulated depreciation-Equipment [ldep] Accumulated depreciation-Equipment Depreciation expense Debit 38,400 X 24,000 X 0 6,400 X 0 62,400 X 0 0 6,400 x d. Now assume that you are preparing the year-end consolidation journal entries for the year ending December 31, 2019. Prepare the required [l] consolidation journal entries during the holding period. Consolidation Worksheet Description [lgain] Investment in subsidiary Equipment Accumulated depreciation-Equipment [ldep] Accumulated depreciation-Equipment Depreciation expense Debit 608,000 X 66,000 X 0 22,000 X 0 Credit 0 0 126,800 x 0 22,000 X