On January 1, 2020, Pail Corporation acquired 75 percent of Sand Company's common stock for $525,000 cash. The fair value of the noncontrolling interest at that date was determined to be $175,000. At the date of the business combination, the book values of Sand's net assets and liabilities approximated fair value except for depreciable plant assets, which were UNDERvalued by $4000 and Inventory, which was OVERvalued by $4500 The remaining useful life of the plant assets was set at 10 years. For the year ended December 31, 2020, Pail reported Depreciation Expense of $15000 on its general ledger. Sand reported Depreciation Expense of $9000 on its general ledger. What amount of Depreciation Expense should be reported on the 12/31/20 consolidated Income Statement?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2020, Pail Corporation acquired 75 percent of Sand Company's common stock for $525,000 cash. The fair value of
the noncontrolling interest at that date was determined to be $175,000.
At the date of the business combination, the book values of Sand's net assets and liabilities approximated fair value except for
depreciable plant assets, which were UNDERvalued by $4000 and Inventory, which was OVERvalued by $4500 The remaining
useful life of the plant assets was set at 10 years.
For the year ended December 31, 2020, Pail reported Depreciation Expense of $15000 on its general ledger. Sand reported
Depreciation Expense of $9000 on its general ledger.
What amount of Depreciation Expense should be reported on the 12/31/20 consolidated Income Statement?
Transcribed Image Text:On January 1, 2020, Pail Corporation acquired 75 percent of Sand Company's common stock for $525,000 cash. The fair value of the noncontrolling interest at that date was determined to be $175,000. At the date of the business combination, the book values of Sand's net assets and liabilities approximated fair value except for depreciable plant assets, which were UNDERvalued by $4000 and Inventory, which was OVERvalued by $4500 The remaining useful life of the plant assets was set at 10 years. For the year ended December 31, 2020, Pail reported Depreciation Expense of $15000 on its general ledger. Sand reported Depreciation Expense of $9000 on its general ledger. What amount of Depreciation Expense should be reported on the 12/31/20 consolidated Income Statement?
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