On January 1, 2020, Smeder Company, an 80% owned subsidiary of Collins, Inc., transferredequipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for$84,000 cash. At the date of transfer, Smeder's records carried the equipment at a cost of $120,000less accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported netincome of $28,000 and $32,000 for 2020 and 2021, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes.What amount of gain should be reported by Smeder Company relating to the equipment for 2020prior to making consolidating entries?Multiple Choice$36,000.$34,000.$12,000.$10,000.

The right answer is $12000 Books of Smeder(80% owned Sub.) Books of Collins(Parent) Date…

1, 2020, Smeder Company, an 80% owned subsidiary of Collins, with a 10-year life (six of which remain with no salvage value) to C sh. At the date of transfer, Smeder's records carried the equipme ulated depreciation of $48,000. Straight-line depreciation is used 28,000 and $32,000 for 2020 and 2021, respectively. All net inc er are attributed to the seller for consolidation purposes. nt of gain should be reported by Smeder Company relating to the zing consolidating entries? le Choice

1, 2020, Smeder Company, an 80% owned subsidiary of Collins, with a 10-year life (six of which remain with no salvage value) to C sh. At the date of transfer, Smeder's records carried the equipme ulated depreciation of $48,000. Straight-line depreciation is used 28,000 and $32,000 for 2020 and 2021, respectively. All net inc er are attributed to the seller for consolidation purposes. nt of gain should be reported by Smeder Company relating to the zing consolidating entries? le Choice

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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