Pepe, Incorporated acquired 60% of Devin Company on January 1, 2018. On that date Devin sold equipment to Pepe for $45,000. The

Question

3 years ago

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Pepe, Incorporated acquired 60% of Devin Company on January 1, 2018. On that date Devin sold equipment to Pepe for $45,000. The

equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2018 and 2019, respectively. Pepe uses the equity method to account for its investment in Devin.What is the consolidated gain or loss on equipment for 2018

Business

1 answer:

CaHeK987 [17] · Answer 1 · 2022-06-19T06:47:44+03:00

Answer: $9000

Explanation:

Based on the values given in the question, the consolidated gain or loss on equipment for 2018 would be calculated as:

Cost of equipment = $120,000

Less accumulated depreciation = $66,000

Less: Amount Devin sold equipment to Pepe = $45,000

Consolidated loss= $120,000 - $66000 - $45000

= $9000