(Module 1) On 1/2/06, Penex sold equipment costing $100,000 to its 100%-owned subsidiary, Senex for $75,000. At the time of the sale, the equipment had been 60% depreciated (using the straight-line method and an assigned life of 10 years). Senex continued depreciating the equipment by using the straight-line method but assigned a remaining life of 5 years. Senex reported $500,000 of net income for 2006.
Required:
a. Prepare the general ledger entry required at 12/31/06 under the complete equity method.
b. Prepare the consolidation entry or entries required at 12/31/06.

Question

Quizplus · Accepted Answer

The Answer of (Module 1) On 1/2/06, Penex sold equipment costing $100,000 to its 100%-owned subsidiary, Senex for $75,000. At the time of the sale, the equipment had been 60% depreciated (using the straight-line method and an assigned life of 10 years). Senex continued depreciating the equipment by using the straight-line method but assigned a remaining life of 5 years. Senex reported $500,000 of net income for 2006.
Required:
a. Prepare the general ledger entry required at 12/31/06 under the complete equity method.
b. Prepare the consolidation entry or entries required at 12/31/06.

(Module 1) on 1/2/06, Penex Sold Equipment Costing $100,000 to Its