Question 4 (8 marks)

Padre Ltd. holds 90 percent of the outstanding shares of Sonora Ltd. On January 1, 2019, Padre Ltd. transferred equipment to Sonora for $95,000. The equipment had cost $130,000 originally but had a $50,000 carrying value and five-year remaining life at the date of transfer. Depreciation expense is computed according to the straight-line method with no residual value.

Required:

What would be the consolidation worksheet entries in relation to this asset when preparing the consolidated financial statements for the following accounting periods ending at (Ignore the tax effect):

1. 31 December 2019
2. 31 December 2020
3. 31 December 2021