Wilson owned equipment with an estimated life of 10 years when it was acquired for an original cost of $80,000. The equipment had a book value of $50,000 at January 1, 2012. On January 1, 2012, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years.
On April 1, 2012 Simon Company, a 90% owned subsidiary of Wilson Company, bought the equipment from Wilson for $68,250 and for depreciation purposes used the estimated remaining life as of that date. The following data are available pertaining to Simon’s income and dividends:
2012 2013 2014
Net Income 100,000 120,000 130,000
Dividends 40,000 50,000 60,000
Compute the amortization of gain through a depreciation adjustment for 2014 for consolidation purposes.
Hi there! Click one of our representatives below and we will get back to you as soon as possible.