Scroll Inc., a wholly owned subsidiary of Pirn, Inc. began operations on January 1, 20x2. The following information is from the condensed 20x2 income statements of Pirn and Scroll: Pirn P500,000 (350,000) P150,000 Scroll P300,000 Sales Cost of goods sold Gross profit Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before taxes (270,000) P30,000 (40,000) (60,000) 50,000 12,000 P62,000 (10,000) (15,000) P 5,000 P 5,000 Equipment purchased by Scroll from Pirn for P36,000 on January 1, 20x2, is depreciated using the straigh line method over four years. What amount should be reported as depreciation expense in Pirn's consolidated income statements? A. 50,000 B. 47,000 C. 44,000 D. 41,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Scroll Inc., a wholly owned subsidiary of Pirn, Inc. began operations on January 1, 20x2. The following
information is from the condensed 20x2 income statements of Pirn and Scroll:
Pirn
P500,000
(350,000)
P150,000
(40,000)
(60,000)
50,000
12,000
P62,000
Scroll
P300,000
Sales
(270,000)
P30,000
Cost of goods sold
Gross profit
Depreciation
Other expenses
Income from operations
Gain on sale of equipment to Scroll
Income before taxes
(10,000)
(15,000)
P 5,000
P 5,000
Equipment purchased by Scroll from Pirn for P36,000 on January 1, 20x2, is depreciated using the straight-
line method over four years. What amount should be reported as depreciation expense in Pirn's
consolidated income statements?
A. 50,000
B. 47,000
C. 44,000
D. 41,000
Transcribed Image Text:Scroll Inc., a wholly owned subsidiary of Pirn, Inc. began operations on January 1, 20x2. The following information is from the condensed 20x2 income statements of Pirn and Scroll: Pirn P500,000 (350,000) P150,000 (40,000) (60,000) 50,000 12,000 P62,000 Scroll P300,000 Sales (270,000) P30,000 Cost of goods sold Gross profit Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before taxes (10,000) (15,000) P 5,000 P 5,000 Equipment purchased by Scroll from Pirn for P36,000 on January 1, 20x2, is depreciated using the straight- line method over four years. What amount should be reported as depreciation expense in Pirn's consolidated income statements? A. 50,000 B. 47,000 C. 44,000 D. 41,000
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