Question

Neptune Corporation owns 70 percent of Pluto Company's stock. On July 1, 20X4, Neptune sold a piece of equipment to Pluto for $56,350. Neptune had purchased this equipment on January 1, 20X1, for $63,000. The equipment's original 15-year estimated total economic life remains unchanged. Both companies use straight-line depreciation. The equipment's residual value is considered negligible.


79.


Required information


Based on the information provided, in the preparation of the 20X4 consolidated financial statements, equipment will be ______ in the consolidation entries.


debited for $6,650


debited for $56,350


debited for $63,000


credited for $63,000

Answer 1

Answer:

credited for $63,000

Explanation:

According to the scenario been described in the question, the correct answer is credited for $63,000, this is so because from the information been given, when making the preparation of the consolidated financial statements, the equipment that will be credited for $63,000 is in the consolidation entries. Since the value of the book equipment is $63,000 so that will be credited.