_____ On 1/3/06, Sayex (an 80%-owned subsidiary of Payex) sold equipment costing $100,000 to Payex for $45,000. At the time of the sale, the equipment had a book value of $20,000 (having been depreciated using the straight-line method, an original life of 10 years, and no estimated salvage value). Payex continued depreciating the equipment by using the straight-line method but assigned a remaining life of 5 years.
What are the cost and accumulated depreciation, respectively, of this equipment in the 12/31/07-not 12/31/06-consolidated balance sheet?

Question

Quizplus · Accepted Answer

The cost of the equipment in the consolidated balance sheet is $100,000, which is the original cost of the equipment to Sayex. The accumulated depreciation is $88,000, which is the sum of the depreciation taken by Sayex ($20,000) and the depreciation taken by Payex ($68,000).

_____ on 1/3/06, Sayex (An 80%-Owned Subsidiary of Payex) Sold