Marty holds 75 percent of Clover's voting common shares. On January 1, 20X7, Marty Corporation sold to Clover Corporation equipment it had purchased for $180,000 and used for eight years. Marty recorded a gain of $14,000 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Which of the following is the consolidation entry to adjust depreciation expense and accumulated depreciation for the excess depreciation? Debit Depreciation Expense for $2,000; Credit Accumulated Depreciation for $2,000 O Debit Accumulated Depreciation for $12,000; Credit Depreciation Expense for $12,000 O Debit Accumulated Depreciation for $2,000; Credit Depreciation Expense for $2,000 Debit Accumulated Depreciation for $10,000; Credit Depreciation Expense for $10,000

Marty holds 75 percent of Clover's voting common shares. On January 1, 20X7, Marty Corporation sold to Clover Corporation equipment it had purchased for $180,000 and used for eight years. Marty recorded a gain of $14,000 on the sale. The equipment has a total useful life of 15 years and is depreciated on a straight-line basis. Which of the following is the consolidation entry to adjust depreciation expense and accumulated depreciation for the excess depreciation? Debit Depreciation Expense for $2,000; Credit Accumulated Depreciation for $2,000 O Debit Accumulated Depreciation for $12,000; Credit Depreciation Expense for $12,000 O Debit Accumulated Depreciation for $2,000; Credit Depreciation Expense for $2,000 Debit Accumulated Depreciation for $10,000; Credit Depreciation Expense for $10,000

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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Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a used piece of equipment to Stop in exchange for $236,000 cash. Pit's original cost of the equipment was $728,000 and accumulated depreciaiton of 01/01/21 was $447,000. The remaining useful life of the equipment is 10 years, and Stop will use that same usefull life. Both companies use the straight line method of depreciation. The Consolidation Entry would include:
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Foc
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