**Image Transcription for Educational Website**---**Scenario:**Reynolds buys a building with a 10-year useful life on January 1, 2019, for $1,000,000. Straight-line depreciation is used. On the same day, Reynolds sells the building to a 90% owned subsidiary for $1,200,000. The subsidiary also uses a remaining useful life of 10 years. What is the appropriate worksheet entry for "excess depreciation" that must be prepared at December 31, 2019?**Worksheet Entry Options:**- **Option 1:** - Dr. Depreciation Expense $120,000 - Cr. Accumulated Depreciation $120,000- **Option 2:** - Dr. Depreciation Expense $20,000 - Cr. Accumulated Depreciation $20,000- **Option 3:** - Dr. Accumulated Depreciation $20,000 - Cr. Depreciation Expense $20,000- **Option 4:** - Dr. Accumulated Depreciation $120,000 - Cr. Depreciation Expense $120,000---**Explanation:**This educational scenario involves determining the appropriate accounting entry for excess depreciation following an inter-company transaction. The excess depreciation reflects the difference in the depreciation expense based on the revised carrying amount of the asset due to the transaction between Reynolds and its subsidiary.Understanding the proper entry helps ensure accurate financial reporting and compliance with accounting standards, specifically related to the effects of inter-company transactions and adjustments needed for consolidated financial statements.

Depreciation is the reduction in the value of asset due to normal wear and tear Effluxion of time.…

Reynolds buys building (10 year useful life ) on January 1, 2019 for $1,000,000. Straight line depreciation is used. On the same day, Reynolds s building to 90% owned subsidiary for $1,200,000. Subsidiary also uses a remaining useful life of 10 years. What is the appropriate worksheet emm for "excess depreciation" that must be prepared at December 31, 2019? O Dr. Depreciation Expense $120,000. Cr. Accumulated Depreciation $120,000 O Dr. Depreciation Expense $20,000. Cr. Accumulated Depreciation $20,000 O Dr. Accumulated Depreciation $20,000 Cr. Depreciation Expense $20,000

Reynolds buys building (10 year useful life ) on January 1, 2019 for $1,000,000. Straight line depreciation is used. On the same day, Reynolds s building to 90% owned subsidiary for $1,200,000. Subsidiary also uses a remaining useful life of 10 years. What is the appropriate worksheet emm for "excess depreciation" that must be prepared at December 31, 2019? O Dr. Depreciation Expense $120,000. Cr. Accumulated Depreciation $120,000 O Dr. Depreciation Expense $20,000. Cr. Accumulated Depreciation $20,000 O Dr. Accumulated Depreciation $20,000 Cr. Depreciation Expense $20,000

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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