A parent company sells equipment to its subsidiary on January 1, 2018 for $90,000. At the time, the equipment was reported on the parent's books at a net book value of $60,000. The remaining life of the equipment as of January 1, 2018 is six years, and straight-line depreciation, no residual value is used. At what net value should this equipment be reported on a December 31, 2020 consolidated balance sheet (three years after the intercompany equipment sale)?

Question

Quizplus · Accepted Answer

Consolidated depreciation expense is $60,000/6 = $10,000 per year
Consolidated book value of equipment is $60,000 - (3 x $10,000) = $30,000

A Parent Company Sells Equipment to Its Subsidiary on January