Required information On January 1, 20X7, Server Company purchased a machine with an expected economic life of five years. On January 1, 20X9, Server sold the machine to Patron Corporation and recorded the following entry: Cash Accumulated Depreciation Machine Gain on Sale of Equipment 45,000 28,000 70,000 3,000 Patron Corporation holds 75 percent of Server's voting shares. Server reported net income of $50,000, and Patron reported income from its own operations of $100,000 for 20X9. There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer.
Required information On January 1, 20X7, Server Company purchased a machine with an expected economic life of five years. On January 1, 20X9, Server sold the machine to Patron Corporation and recorded the following entry: Cash Accumulated Depreciation Machine Gain on Sale of Equipment 45,000 28,000 70,000 3,000 Patron Corporation holds 75 percent of Server's voting shares. Server reported net income of $50,000, and Patron reported income from its own operations of $100,000 for 20X9. There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter14: Statement Of Cash Flows
Section: Chapter Questions
Problem 37E: During 20X1, Craig Company had the following transactions: a. Purchased 300,000 of 10-year bonds...
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Required information
On January 1, 20X7, Server Company purchased a machine with an expected economic life of five years. On January 1,
20X9, Server sold the machine to Patron Corporation and recorded the following entry:
Cash
Accumulated Depreciation
Machine
Gain on Sale of Equipment
Patron Corporation holds 75 percent of Server's voting shares. Server reported net income of $50,000, and Patron
reported income from its own operations of $100,000 for 20X9. There is no change in the estimated economic life of the
equipment as a result of the intercorporate transfer.
Multiple Choice
Based on the preceding information, in the preparation of the 20X9 consolidated balance sheet, machine will be:
O
O
debited for $1,000.
debited for $15,000.
45,000
28,000
credited for $45,000.
70,000
3,000
debited for $25,000.
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