Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2010, Dunn sold to Grey for $40,000 machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year life by the straight-line method. The net adjustments to compute 2010 and 2011 consolidated net income would be an increase (decrease) of
2010 | 2011 | |
a. | $(8,000) | $2,000 |
b. | $(8,000) | -0- |
c. | $(10,000) | $2,000 |
d. | $(10,000) | -0- |
(AICPA adapted) |
| |
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