Problem
At the beginning of the current period, IKXOAIX Ltd sold Equipment to its wholly-owned subsidiary, liKSA Ltd, for $960,000. IKXOAIX Ltd had initially paid $2,400,000 for this asset, and at the time of sale to liKSA , Ltd had charged depreciation of $1,800,000. This asset is used differently in liKSA Ltd from how it was used in Moon Ltd; thus, whereas IKXOAIX Ltd used a 15% p.a. straight-line depreciation method, Sun Ltd uses a 25% straight-line depreciation method. In calculating the depreciation expense for the consolidated group, the group accountant is unsure which depreciation rate should be applied and which depreciation rate to use and complete the Journal Entries.