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What working paper entry to consolidate financial statements

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Reference no: EM132920559

On January 1, 2012, P Company sold a warehouse with a book value of 80,000 and a 20 year remaining useful life to its wholly owned subsidiary, S Company, for 120,000. Both P and S use the straight line depreciation method.

On December 31, 2012, the separate company financial statements contained the following balances connected with the warehouse.

                                                   P Company                 S Company
Gain on sale of warehouse          40,000
Depreciation expense                                                   6,000
Warehouse                                                                120,000
Accumulated depreciation                                                6,000

Question 1: A working paper entry to consolidate the financial statements of P and S on December 31, 2012 will include:

a. A debit to accumulated depreciation for 2,000
b. A credit to depreciation expense for 4,000
c. A debit to gain on sale of warehouse for 38,000
d. A credit to depreciation expense for 6,000
e. None of these

 

Reference no: EM132920559

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