On January 1, Poe Corp. sold a machine for $4,798,243 to Saxe Corp., its wholly-owned subsidiary....

On January 1, Poe Corp. sold a machine for $4,798,243 to Saxe Corp., its wholly-owned subsidiary. Poe paid $1.1 million for this machine, which had accumulated depreciation of $250,000 on the sale date. Poe estimated a $100,000 salvage value and depreciated the machine on the straight-line basis over 20 years, a policy that Saxe continued. In Poe's December 31 consolidated balance sheet, the accumulated depreciation of this machine should be shown on the consolidated balance sheet as:

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Answer

Explanation:
Accumulated depreciation is determined as follows:

Particulars	Amount
Historical Cost	$ 11,00,000
Salvage Value	$ -1,00,000
Depreciable Base	$ 10,00,000
Useful Life	20 Years
Straight-Line Depreciation Expense	$ 50,000

Calculation Of Accumulated Depreciation
Particulars	Amount
Balance On Sale Date	$ 2,50,000
Straight-Line Depreciation Expense	$ 50,000
Accumulated Depreciation	$ 3,00,000

Therefore, cost $11,00,000 and a accumulated depreciation
$3,00,000 should be included in consolidated balance sheet.

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ekkarill92 answered 1 year ago

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