Reference no: EM132941738
On January 1, 2017, HHH Corporation purchased a truck with a useful life of five years, and a salvage value of $8,000. On January 1, 2019, HHH sold the truck to DDD Corporation. DDD assumed the same salvage value and remaining life of three years used by HHH. Straight-line depreciation is used by both companies.
On January 1, 2019, HHH recorded the following journal entry:
Debit Credit
Cash 50,000
Accumulated depreciation 18,000
Truck 53,000
Gain on Sale of Truck 15,000
DDD holds 60% of HHH. HHH reported net income of $55,000 in 2019 and DDD's separate net income (excludes interest in HHH) for 2019 was $98,000.
Problem 1: In the eliminating/adjusting entries on consolidation working papers for 2019, the Truck account was:
A) debited for $3,000.
B) credited for $15,000.
C) debited for $15,000.
D) credited for $3,000.
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