What amount should be reported as depreciation expense in Pirn’s consolidated income statements?a. 50,000 b. 47,000 c. 44,000d. 41,000 Scroll Inc., a wholly owned subsidiary of Pirn, Inc. began operations onJanuary 1, 20x2. The following information is from the condensed 20x2 incomestatements of Pirn and Scroll:PirnScrollSalesP500,000P300,000(270,000)Cost of goods soldGross profitDepreciationOther expenses(350,000)P150,000P30,000(40,000)(60,000)(10,000)(15,000)Р 5,000Income from operationsGain on sale of equipment to Scroll50,00012,000Income before taxesP62,000Р 5,000Equipment purchased by Scroll from Pirn for P36,000 on January 1, 20x2, isdepreciated using the straight- line method over four years.

Depreciation expense is the cost portion which is allocated to the fixed assets of the company and…

Answered: What amount should be reported as…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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

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
Scroll
Sales
P500,000
P300,000
(270,000)
Cost of goods sold
Gross profit
Depreciation
Other expenses
(350,000)
P150,000
P30,000
(40,000)
(60,000)
(10,000)
(15,000)
Р 5,000
Income from operations
Gain on sale of equipment to Scroll
50,000
12,000
Income before taxes
P62,000
Р 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.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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