On January 1, 2006, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000. The equipment had cost $125,000, and the balance in accumulated depreciation was $45,000. The equipment had an estimated remaining useful life of eight years and $0 salvage value. Both companies use straight-line depreciation. On their separate 2006 income statements, Payton and Starker reported depreciation expense of $84,000 and $60,000, respectively.
A. Create the eliminations for consolidation due to the following transaction for 2006 and 2009. That would be TA, ED, *TA, and *ED.
B. What is the amount of depreciation on the 2006 consolidated income statement?
The amount of depreciation is determined.