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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

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
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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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.
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 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.
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