Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1,2007.On December 31,2008,Mortar received $390,000 from Granite for a equipment Mortar had purchased on January 1,2005,for $400,000.The equipment is expected to have a 10-year useful life and no salvage value.Both companies depreciate equipments on a straight-line basis.
-Based on the preceding information,the gain on sale of the equipment recorded by Mortar for 2008 is:

Question

Quizplus · Accepted Answer

Mortar recorded a gain of $150,000 on the sale of the equipment to Granite. This gain is calculated as the difference between the sales price of $390,000 and the book value of the equipment on Mortar's books, which is $240,000 (original cost of $400,000 less accumulated depreciation of $160,000).

Mortar Corporation Acquired 80 Percent of Granite Corporation's Voting Common