On January 1, 2014, Bigg Corporation sold equipment with a book value of $20,000 and a 10-year remaining useful life to its wholly-owned subsidiary, Little Corporation, for $30,000. Both Bigg and Little use the straight-line depreciation method, assuming no salvage value. On December 31, 2014, the separate company financial statements held the following balances associated with the equipment: Bigg Little Gain on sale of equipment $10,000 Depreciation expense $3,000 Equipment 30,000 Accumulated depreciation 3,000 A working paper entry to consolidate the financial statements of Bigg and Little on December 31, 2014 included a A. Debit to accumulated depreciation for $1,000. B. Credit to gain on sale of equipment for $10,000. C. Credit to depreciation expense for $3,000. D. Debit to equipment for $10,000.
On January 1, 2014, Bigg Corporation sold equipment with a book value of $20,000 and a 10-year remaining useful life to its wholly-owned subsidiary, Little Corporation, for $30,000. Both Bigg and Little use the
Bigg Little
Gain on sale of equipment $10,000
Depreciation expense $3,000
Equipment 30,000
A working paper entry to consolidate the financial statements of Bigg and Little on December 31, 2014 included a
| A. |
Debit to accumulated depreciation for $1,000. |
|
| B. |
Credit to gain on sale of equipment for $10,000. |
|
| C. |
Credit to depreciation expense for $3,000. |
|
| D. |
Debit to equipment for $10,000. |
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