Using the same facts as Question 14 but assuming that S will depreciate the asset over its remaining estimated useful life of eight years,what is the depreciation expense adjustment required on consolidation one year after the intragroup sale?
A) Cr. $400
B) Dr. $400
C) Cr. $2100
D) Cr. $2500

Question

Quizplus · Accepted Answer

The depreciation expense adjustment required on consolidation is a credit of $400. This is because the asset's carrying amount was overstated by $3200 due to the intragroup sale, and the depreciation overstatement for one year is $3200/8 = $400.

Using the Same Facts as Question 14 but Assuming That