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AURORKA [14]
3 years ago
10

"On January 1, 2018, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000. The equipment had cost $125,000,

and the balance in accumulated depreciation was $45,000. The equipment had an estimated remaining useful life of eight years and $0 salvage value. Both companies use straight-line depreciation. On their separate 2018 income statements, Payton and Starker reported depreciation expense of $84,000 and $60,000, respectively. The amount of depreciation expense on the consolidated income statement for 2018 would have been:"
Business
1 answer:
MAXImum [283]3 years ago
3 0

Solution:

Sales Price $115,000 - BV $80,000 = $35,000

Gain on Sale /8 years = $4,375

Annual Amortisation of Unrealised Gain over Expected Useful Life of the Asset

Parent's Depreciation $84,000 + Sub's Depreciation $60,000 - Annual amortisation $4,375 = $139,625

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5 0
1 year ago
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