On January 1, 2019, S Corp purchased a computer with an expected economic life of 20 years. On January 1, 2021, S Corp sold the computer to T Corp. and recorded the following entry: Debit Cash - 30,000 Accumulated Depreciation - 4,000 Loss on Sale of equipment - 6,000 Credit Computer Equipment - 40,000 S Corp holds 60% of the stocks of T Corp. T Corp reported net income of P45,000 and S Corp reported net income from its own operations of P85,000 in 2021. There is no change in the useful life of the equipment as a result of the intercompany transaction.

On January 1, 2019, S Corp purchased a computer with an expected economic life of 20 years. On January 1, 2021, S Corp sold the computer to T Corp. and recorded the following entry: Debit Cash - 30,000 Accumulated Depreciation - 4,000 Loss on Sale of equipment - 6,000 Credit Computer Equipment - 40,000 S Corp holds 60% of the stocks of T Corp. T Corp reported net income of P45,000 and S Corp reported net income from its own operations of P85,000 in 2021. There is no change in the useful life of the equipment as a result of the intercompany transaction.

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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