On 1/1/X1 Peck sells a machine with a $20,000 book value to its subsidiary Shea for $30,000. Shea intends to use the machine for 4 years. On 12/31/X2 Shea sells the machine to an outside party for $14,000. What amount of gain or (loss) for the sale of assets is reported on the consolidated financial statements?

Question

Quizplus · Accepted Answer

The consolidated financial statements will report a gain of $4,000 on the sale of the machine. This is because the machine was sold for $14,000, which is $4,000 more than its book value of $20,000.

On 1/1/X1 Peck Sells a Machine with a $20,000 Book