Plesco Corporation acquired 80 percent of Slesco Corporation's voting common stock on January 1,20X7.On January 1,20X8,Plesco received $350,000 from Slesco for equipment Plesco had purchased on January 1,20X5,for $400,000.The equipment is expected to have a 10-year useful life and no salvage value.Both companies depreciate equipment on a straight-line basis.
-Based on the preceding information,in the preparation of the 20X8 consolidated financial statements,equipment will be:

Question

Quizplus · Accepted Answer

The equipment was sold at a gain of $50,000 ($350,000 - $300,000). The gain is recognized in the consolidated income statement, and the equipment is debited for the gain amount.

Plesco Corporation Acquired 80 Percent of Slesco Corporation's Voting Common