Fort owns 70% of the outstanding common shares of Sort.On December 30,20X3,Sort sold some equipment to Fort for $100,000.The equipment had been purchased by Sort for $120,000 in 20X2,had accumulated amortization of $30,000 and a six-year remaining life at December 31,20X3.Both companies record a full year of amortization expense for assets purchased in the first half of the year and no amortization on assets purchased in the last half of the year.Equipment for Fort and Sort on their separate-entity balance sheets at December 31,20X3 was as follows:

On December 31,20X6,Fort sold the equipment to an outside company for $65,000.What is the gain on sale of equipment to be reported on the consolidated income statement for the year ended December 31,20X6?
A)$10,500
B)$14,000
C)$15,000
D)$20,000

Question

Fort owns 70% of the outstanding common shares of Sort.On December 30,20X3,Sort sold some equipment to Fort for $100,000.The equipment had been purchased by Sort for $120,000 in 20X2,had accumulated amortization of $30,000 and a six-year remaining life at December 31,20X3.Both companies record a full year of amortization expense for assets purchased in the first half of the year and no amortization on assets purchased in the last half of the year.Equipment for Fort and Sort on their separate-entity balance sheets at December 31,20X3 was as follows:

On December 31,20X6,Fort sold the equipment to an outside company for $65,000.What is the gain on sale of equipment to be reported on the consolidated income statement for the year ended December 31,20X6?

On December 31,20X6,Fort sold the equipment to an outside company for $65,000.What is the gain on sale of equipment to be reported on the consolidated income statement for the year ended December 31,20X6?
A)$10,500 
B)$14,000 
C)$15,000 
D)$20,000

Quizplus · Accepted Answer

The Answer of Fort owns 70% of the outstanding common shares of Sort.On December 30,20X3,Sort sold some equipment to Fort for $100,000.The equipment had been purchased by Sort for $120,000 in 20X2,had accumulated amortization of $30,000 and a six-year remaining life at December 31,20X3.Both companies record a full year of amortization expense for assets purchased in the first half of the year and no amortization on assets purchased in the last half of the year.Equipment for Fort and Sort on their separate-entity balance sheets at December 31,20X3 was as follows:

On December 31,20X6,Fort sold the equipment to an outside company for $65,000.What is the gain on sale of equipment to be reported on the consolidated income statement for the year ended December 31,20X6?
A)$10,500 
B)$14,000 
C)$15,000 
D)$20,000

Fort Owns 70% of the Outstanding Common Shares of Sort