Question

Pillar Company owns 70 percent of Salt Company's outstanding common stock. On December 31, 20x8, Salt sold equipment to Pillar at a price in excess of Salt's carrying amount but less than its original cost. On a consolidated balance sheet at December 31,20x8, the carrying amount of the equipment should be reported at:_______________ A) Pillar's original cost. B) Salt's original cost. C) Pillar's original cost less Salt's recorded gain. D) Pillar's original cost less 70 percent of Salt's recorded gain.

Answer 1

Answer:

C. Pillar's original cost less Salt's recorded gain

Explanation:

For physical assets, that is in the form of machineries or computer hardware or in this case, equipment, we can calculate the carrying cost to be the original cost minus accumulated depreciation.

in answer to this question, the carrying amount of the equipment should be reported at Pillar's original cost less Salt's recorded gain.