On January 1,2009,Light Corporation sold equipment for $400,000 to Star Corporation,its wholly owned subsidiary.Light had paid $900,000 for this equipment,which had accumulated depreciation of $170,000.Light estimated a $50,000 salvage value and depreciated the tractor using the straight-line method over 10 years,a policy that Star continued.In Light's December 31,2009,consolidated balance sheet,this tractor should be included in fixed-asset cost and accumulated depreciation as:

Question

Quizplus · Accepted Answer

The equipment should be recorded at the original cost of $900,000 with accumulated depreciation adjusted for the year, considering the intercompany sale does not affect the consolidated financial statements.

On January 1,2009,Light Corporation Sold Equipment for $400,000 to Star