Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On January
Question:
Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On January 1, 20X8, Mortar received $350,000 from Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000. The equipment is expected to have a 10-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis.
Required information
Based on the preceding information, in the preparation of the 20X9 consolidated income statement, depreciation expense will be:
a. Debited for $40,000 in the consolidating entries.
b. Credited for $10,000 in the consolidating entries.
c. Debited for $10,000 in the consolidating entries.
d. Credited for $40,000 in the consolidating entries.
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik