Use the following information to answer the question(s) below.

On January 1, 2012, Shrimp Corporation purchased a delivery truck with an expected useful life of five years, and a salvage value of $8,000. On January 1, 2014, Shrimp sold the truck to Pacet Corporation. Pacet assumed the same salvage value and remaining life of three years used by Shrimp. Straight-line depreciation is used by both companies. On January 1, 2014, Shrimp recorded the following journal entry:

-In preparing the consolidated financial statements for 2014,the elimination entry for depreciation expense was a

Question

Use the following information to answer the question(s) below.

On January 1, 2012, Shrimp Corporation purchased a delivery truck with an expected useful life of five years, and a salvage value of $8,000. On January 1, 2014, Shrimp sold the truck to Pacet Corporation. Pacet assumed the same salvage value and remaining life of three years used by Shrimp. Straight-line depreciation is used by both companies. On January 1, 2014, Shrimp recorded the following journal entry:

-In preparing the consolidated financial statements for 2014,the elimination entry for depreciation expense was a

Quizplus · Accepted Answer

In preparing consolidated financial statements, intercompany transactions, including depreciation expense, must be eliminated to avoid double counting. The elimination entry for depreciation expense would be a credit to reverse the expense recorded in the consolidated financial statements.

Use the Following Information to Answer the Question(s) Below