The equipment had a book value of 50000 at january 1 2010

Reference no: EM13572854

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, 2010. On January 1, 2010, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years.
On April 1, 2010 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:

2010 2011 2012

Net income 100000 120000 130000

Dividends 40000 50000 60000

-Compute the amortization of gain through a depreciation adjustment for 2010 for consolidation purposes.

-Compute the gain on transfer of equipment reported by wilson for 2010.

Reference no: EM13572854

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