On January 1, 2019, a wholly-owned subsidiary sold equipment to its parent for $500,000. The subsidiary's books showed original cost and accumulated depreciation of $300,000 and $80,000, respectively, at the date of sale. The equipment had a remaining life of five years and is straight-line depreciated. On December 31, 2020 (two years after the sale), the unconfirmed gain on the equipment is:

Question

Quizplus · Accepted Answer

Total gain on the sale = $500,000 - ($300,000 - $80,000) = $280,000
Unconfirmed gain after two years = 3/5 x $280,000 = $168,000

On January 1, 2019, a Wholly-Owned Subsidiary Sold Equipment to Its