Problem $7-27($Static$)$ Consolidation Entry LO $7-6$

In preparing its consolidated financial statements at December $31,20$X$7,$ the following consolidation entries were included in the

consolidation worksheet of Powder Corporation:

Powder owns $60$ percent of Snow Corporation's voting common stock. On January $1,20$X$7,$ Snow sold Powder a building it had

purchased for $$600,000$ on January $1,201,$ and depreciated on a $20-$year straight$-$line basis. Powder recorded depreciation for $207$

using straight$-$line depreciation and the same useful life and residual value as Snow.

Required:

a$.$ What amount did Powder pay Snow for the building?

b$.$ What amount of accumulated depreciation did Snow report at January $1,20$X$7,$ prior to the sale?

c$.$ What annual depreciation expense did Snow record prior to the sale?

d$.$ What expected residual value did Snow use in computing its annual depreciation expense?

e$.$ What amount of depreciation expense did Powder record in $20$X$7?$

$\backslash$table$[[$Depreciation expense,$$30,000$