On January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry: Cash 39,000 Accumulated Depreciation 16,000 Computer Equipment 40,000 Gain on sale of equipment 15,000 TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer. In the preparation of the 20x4 consolidated income statement, depreciation expense will be: A. Debited for 5,000 in eliminating entries B. Credited for 5,000 in eliminating entries C. Debited for 13,000 in eliminating entries D. Credited for 13,000 in eliminating entries
On January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry:
Cash 39,000
Computer Equipment 40,000
Gain on sale of equipment 15,000
TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer.
In the preparation of the 20x4 consolidated income statement, depreciation expense will be:
A. Debited for 5,000 in eliminating entries
B. Credited for 5,000 in eliminating entries
C. Debited for 13,000 in eliminating entries
D. Credited for 13,000 in eliminating entries
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
