Question
Volovodov, Inc. and Okoye Co. are related companies subject to consolidation. On 1/1/2X, Volovodov, Inc. sold machinery to Okoye Co. for $200,000 cash that had
Volovodov, Inc. and Okoye Co. are related companies subject to consolidation. On 1/1/2X, Volovodov, Inc. sold machinery to Okoye Co. for $200,000 cash that had an original purchase price of $240,000, useful life of 4 years, accumulated depreciation at the time of sale of $180,000, and was expected to be continued to be depreciated at $60,000 per year had it not been sold. Okoye Co. placed the machine in service on 1/1/2X, and is depreciating it over 2 years using straight-line depreciation. The portion of the elimination entry at the time of consolidation at year-end 2X' to account for any required adjustment to the machinery account would be:
a)
Credit to Machinery of $40,000
b)
Debit to Machinery of $50,000
c)
Credit to Machinery of $50,000
d)
Debit to Machinery of $40,000
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