Riyadh Electric Company purchased a machine on Jan 1, 2011 for $ 240,000 and estimated that the machine would have a useful life of 10 years with no salvage value. After two years, on Dec. 31, 2012, Riyadh Electric Company sold the machine to its 100 % owned subsidiary, Medina Co. for $ 200,000. Medina Co. estimated that the asset had a remaining useful life of five years.

Required:

- What is the amount of the gain or loss recorded by Riyadh Electric Company at the time of the fixed transfer?

- What balance would have existed if the transfer had not taken place?

- Show the worksheet entry on Dec. 31, 2012 to eliminate the asset transfer to make adjustment to change form Actual to As If the asset hadnt been transferred.