On January 1,20X9,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 31,20X9,consolidated balance sheet,this tractor should be included in fixed-asset cost and accumulated depreciation as:

Question

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The equipment was sold at a loss of $450,000 ($900,000 - $400,000). This loss should be recognized in Light's consolidated income statement for 20X9. The equipment should be included in Light's consolidated balance sheet at its net book value of $280,000 ($400,000 - $120,000).

On January 1,20X9,Light Corporation Sold Equipment for $400,000 to Star