In January 2014, S Company, an 80% owned subsidiary of P Company, sold equipment to P Company for $990,000. S Company's original cost for this equipment was $1,000,000 and had accumulated depreciation of $100,000. P Company continued to depreciate the equipment over its 9 year remaining life using the straight-line method. This equipment was sold to a third party on January 1, 2017 for $720,000. What amount of gain should P Company record on its books in 2017?

a. $30,000.

B. $60,000.

c. $120,000.

d. $180,000.

Question

Business

Blaze Malone

8 March, 07:33

In January 2014, S Company, an 80% owned subsidiary of P Company, sold equipment to P Company for $990,000. S Company's original cost for this equipment was $1,000,000 and had accumulated depreciation of $100,000. P Company continued to depreciate the equipment over its 9 year remaining life using the straight-line method. This equipment was sold to a third party on January 1, 2017 for $720,000. What amount of gain should P Company record on its books in 2017?

a. $30,000.

B. $60,000.

c. $120,000.

d. $180,000.

+3

Answers (1)

Know the Answer?

Javion Ramsey · Answer 1

The amount of gain should P Company record on its books in 2017 is $60,000.

Explanation:

The amount of gain = Sale value - Written down value

= $720,000 - $660,000

= $60,000

Therefore, The amount of gain should P Company record on its books in 2017 is $60,000.