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Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2017, Dunn sold to Grey $40,000 of machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year remaining life by the straight-line method. The net adjustments to compute 2017 and 2018 consolidated net income would be an increase (decrease) of:         2017         2018a. $(8,000)      $2,000b. $(8,000)         –0–c. $(10,000)     $2,000d. $(10,000)       –0–

Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2017, Dunn sold to Grey $40,000 of machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year remaining life by the straight-line method. The net adjustments to compute 2017 and 2018 consolidated net income would be an increase (decrease) of:         2017         2018a. $(8,000)      $2,000b. $(8,000)         –0–c. $(10,000)     $2,000d. $(10,000)       –0–

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2017, Dunn sold to Grey $40,000 of machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year remaining life by the straight-line method. The net adjustments to compute 2017 and 2018 consolidated net income would be an increase (decrease) of: 
        2017         2018
a. $(8,000)      $2,000
b. $(8,000)         –0–
c. $(10,000)     $2,000
d. $(10,000)       –0–

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