Marco Towers Incorporated owns 80% of Flatbush Condos Company. Five years ago on January 1, Marco Towers acquired equipment with a twenty-year life for $1,800,000. No salvage value was anticipated and the equipment was to be depreciated on the straight-line basis. Five years later on January 1, Marco Towers sold the equipment to Flatbush Condos for $1,500,000. At that time, the equipment had a remaining useful life of fifteen years, but still had no expected salvage value. In preparing financial statements for the current year when the sale was made to Flatbush, how does this transfer affect the calculation of consolidated net income?
Marco Towers Incorporated owns 80% of Flatbush Condos Company. Five years ago on January 1, Marco Towers acquired equipment with a twenty-year life for $1,800,000. No salvage value was anticipated and the equipment was to be depreciated on the straight-line basis. Five years later on January 1, Marco Towers sold the equipment to Flatbush Condos for $1,500,000. At that time, the equipment had a remaining useful life of fifteen years, but still had no expected salvage value. In preparing financial statements for the current year when the sale was made to Flatbush, how does this transfer affect the calculation of consolidated net income?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...
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Marco Towers Incorporated owns 80% of Flatbush Condos Company. Five years ago on January 1, Marco Towers acquired equipment with a twenty-year life for $1,800,000. No salvage value was anticipated and the equipment was to be depreciated on the straight-line basis. Five years later on January 1, Marco Towers sold the equipment to Flatbush Condos for $1,500,000. At that time, the equipment had a remaining useful life of fifteen years, but still had no expected salvage value. In preparing financial statements for the current year when the sale was made to Flatbush, how does this transfer affect the calculation of consolidated net income?
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