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Porch Company Owns a 90% Interest in the Screen Company

Question 7

Multiple Choice

Porch Company owns a 90% interest in the Screen Company.Porch sold Screen a milling machine on January 1, 2016, for $50,000 when the book value of the machine on Porch's books was $40,000.Porch financed the sale with Screen signing a 3-year, 8% interest, and note for the entire $50,000.The machine will be used for 10 years and depreciated using the straight-line method.The following amounts related to this transaction were located on the company's trial balances:
 Interest Revenue$4,000 Interest Expense $4,000 Depreciation Expense $5,000\begin{array}{llr} \text { Interest Revenue} &\$4,000\\ \text { Interest Expense } &\$4,000\\ \text { Depreciation Expense } &\$5,000\end{array}

Based upon the information related to this transaction what will be the amounts eliminated in preparing the 2016 consolidated financial statements
\quad Interest Revenue \quad Interest Expense \quad Depreciation Expense


A) \quad 4,000 \quad \quad \quad \quad \quad 4,000 \quad \quad \quad \quad \quad 5,000
B) \quad 4,000 \quad \quad \quad \quad \quad 4,000 \quad \quad \quad \quad \quad 1,000
C) \quad 3,600 \quad \quad \quad \quad \quad 3,600 \quad \quad \quad \quad \quad 900
D) \quad 3,600 \quad \quad \quad \quad \quad 3,600 \quad \quad \quad \quad \quad 4,500

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