Pluto Corporation owns 70 percent of Saturn Company's stock.On July 1,20X4,Pluto sold a piece of equipment to Saturn for $56,350.Pluto had purchased this equipment on January 1,20X1,for $63,000.The equipment's original 15-year estimated total economic life remains unchanged.Both companies use straight-line depreciation.The equipment's residual value is considered negligible.
-Based on the information provided,in the preparation of the 20X4 consolidated financial statements,equipment will be ________ in the consolidation entries.

Question

Quizplus · Accepted Answer

The equipment will be debited for $6,650 in the consolidation entries. This is because Pluto Corporation sold the equipment to Saturn Company for $56,350, which is $6,650 less than the original cost of the equipment.

Pluto Corporation Owns 70 Percent of Saturn Company's Stock