Question

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.

Answer 1

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

Step-by-step 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.