Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1,2007.On January 1,2008,Mortar received $350,000 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 equipment recorded by Mortar for 2008 is:

Question

Quizplus · Accepted Answer

The gain on sale of equipment is $70,000. Mortar's original cost of the equipment was $400,000, and it sold the equipment for $350,000. The gain is the difference between the two, or $70,000.

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