Plesco Corporation acquired 80 percent of Slesco Corporation's voting common stock on January 1, 20X7. On January 1, 20X8, Plesco received $350,000 from Slesco for equipment Plesco 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 consolidation entries related to the equipment transfer for the 20X8 consolidated financial statements, net effect on accumulated depreciation will be:

A. a decrease of $50,000.
B. an increase of $110,000.
C. a decrease of $160,000.
D. an increase of $120,000.


Answer: B

Business

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