Clemente Co. owned all of the voting common stock of Snider Co. On January 2, 2012, Clemente sold equipment to Snider for $125,000. The equipment had cost Clemente $140,000. At the time of the sale, the balance in accumulated depreciation was $40,000. The equipment had a remaining useful life of five years and a $0 salvage value. Straight-line depreciation is used by both Clemente and Snider.
At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2013?
A) $110,000.
B) $105,000.
C) $100,000.
D) $90,000.
E) $60,000.

Question

Quizplus · Accepted Answer

Sales Price $125,000 - BV $140, 000 = Loss on Sale $15,000 is IgnoredEquipment is transferred at BV (Cost $140,000 - Acc. Deprec. $40,000) $100,000 - Deprec. For 2012 & 2013 ($100,000/5) $40,000 = $60,000 BV at 12/31/2013