Question: On 1/3/x6, Pylux sold equipment costing 100000 to its 100%-owned subsidiary, Sylux, for 80000. At the time of the sale, the equipment had been 50% depreciated (using the straight line method and an assigned life of 10 years). SYlux continued depreciating the equipment by using the straight line method over a remaining life of 5 years.
1. What are the cost and accumulated depreciation, respectively, of this equipment in the 12/31/x6 consolidated balance sheet?
a. 80000 and 16000
b. 80000 and 56000
c. 80000 and 60000
d. 100000 and 16000
e. 100000 and 60000
2. What is the amount of the intercompany profit or loss that must be deferred at 12/31/x6?
a. 6000
b. 14000
c. 16000
d. 24000
e. 30000
3. What is the amount of the adjustment to Depreciation Expense in preparing the consolidation worksheet at 12/31/x6?
a. 0
b. 3000
c. 4000
d. 5000
e. 6000