Intercompany sale of depreciable assets Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $604,800 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $504,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent's "stand-alone" income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $630,000. The subsidiary's recorded net income is $126,000. Based on this information, determine the balance for Consolidated depreciation expense: Select one: 0 0 a. $84,000 x b. $45,360 c. $75,600 d. $50,400

Intercompany sale of depreciable assets Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $604,800 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $504,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent's "stand-alone" income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $630,000. The subsidiary's recorded net income is $126,000. Based on this information, determine the balance for Consolidated depreciation expense: Select one: 0 0 a. $84,000 x b. $45,360 c. $75,600 d. $50,400

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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