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$6.00 On January 1, 2006, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000

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Q3. On January 1, 2006, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000. The equipment had cost $125,000, and the balance in accumulated depreciation was $45,000.  The equipment had an estimated remaining useful life of eight years and $0 salvage value.  Both companies use straight-line depreciation.  On their separate 2006 income statements, Payton and Starker reported depreciation expense of $84,000 and $60,000, respectively.

 

A.  Create the eliminations for consolidation due to the following transaction for 2006 and 2009. That would be TA, ED, *TA, and *ED,

 

B.  What is the amount of depreciation on the 2006 consolidated income statement?         

 

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On January 1, 2006, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000
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Preview: ...                          Cr Cash Dr Depreciation expense      Cr Accumulated depreciation ($115,000/8)     $115,000   $ 14,375     $115,000   $ 14,375   During 2009, the following entry was made: Starker Corp   Dr Depreciation expense      Cr Accumulated depreciation   $ 14,375       $ 14,375   A.     Elimination entries 2006 On the group level, the equipment is still kept at the cost of $ 125,000, depreciated at $ 10,000 per year. The accumulated depreciation as at January 1, 2006 was still $ 45,000. There is no gain on sale of asset. The following eliminat ...
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