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17 April, 23:38

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.

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  1. 18 April, 00:36
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    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.
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