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On January 1, 2017, a subsidiary sold equipment to its parent for $520,000. The subsidiary's original cost was $200,000 and as of January 1, 2017, $20,000 in depreciation had been recorded on the subsidiary's books. At the date of sale, the equipment had a 10-year remaining life, straight-line. It is now December 31, 2021 (5 years since the sale), and the parent still holds the equipment.
-In the consolidation eliminating entries for 2021, beginning retained earnings is debited for

Question

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On January 1, 2017, a subsidiary sold equipment to its parent for $520,000. The subsidiary's original cost was $200,000 and as of January 1, 2017, $20,000 in depreciation had been recorded on the subsidiary's books. At the date of sale, the equipment had a 10-year remaining life, straight-line. It is now December 31, 2021 (5 years since the sale), and the parent still holds the equipment.
-In the consolidation eliminating entries for 2021, beginning retained earnings is debited for

Quizplus · Accepted Answer

Original gain = $520,000 - ($200,000 - $20,000) = $340,000 Unconfirmed gain at the beginning of the 5^th year = $340,000 - [($340,000/10) x 4] =

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