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,in the preparation of the 2009 consolidated income statement,depreciation expense will be:

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The equipment was sold for $350,000, which was $50,000 less than its original cost of $400,000. The equipment had been depreciated for 3 years (2005-2007) at $40,000 per year, leaving a book value of $280,000 at the time of sale. The gain on sale was $70,000 ($350,000 - $280,000). In the consolidated financial statements, this gain must be eliminated, and the depreciation expense must be adjusted to reflect the original cost. The annual depreciation difference is $10,000 ($40,000 - $30,000), which should be credited in the eliminating entries.

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