Business, 24.07.2020 03:01 jaydenhoward

Pat Corporation acquired 80 percent of Smack Corporation's voting common stock on January 1, 20X7. On December 31, 20X8, Pat received $390,000 from Smack for equipment Pat had purchased on January 1, 20X5, for $400,000. The equipment is expected to have a 10-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis. Based on the preceding information, in the preparation of the 20x9 consolidated income statement, depreciation expense will be:

a. credited for $25,000 in the consolidating entries.
b. credited for $15,000 in the consolidating entries.
c. debited for $15,000 in the consolidating entries.
d. debited for $25,000 in the consolidating entries.

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Pat Corporation acquired 80 percent of Smack Corporation's voting common stock on January 1, 20X7. O...