On January 1, 20X7, Servant Company Purchased a Machine with an Expected

question 1

Multiple Choice

On January 1, 20X7, Servant Company purchased a machine with an expected economic life of five years. On January 1, 20X9, Servant sold the machine to Master Corporation and recorded the following entry: Master Corporation holds 75 percent of Servant's voting shares. Servant reported net income of $50,000, and Master reported income from its own operations of $100,000 for 20X9. There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer.
Based on the preceding information, in the preparation of the 20X9 consolidated income statement, depreciation expense will be:

• A) Debited for $1,000 in the eliminating entries.
• B) Credited for $1,000 in the eliminating entries.
• C) Debited for $15,000 in the eliminating entries.
• D) Credited for $15,000 in the eliminating entries.

---

Definitions:

Social Contract

A theory or model, originating during the Age of Enlightenment, that typically concerns the legitimacy of the authority of the state over the individual, positing that individuals consent, either explicitly or tacitly, to surrender some of their freedoms in exchange for protection of remaining rights.

Right to a Job

The belief or principle that everyone is entitled to have the opportunity for employment.

Society

A structured community of people bound together by similar traditions, institutions, or nationality.

Simone de Beauvoir

A 20th-century French philosopher and writer, known for her significant contributions to existentialism and feminism, notably through her work "The Second Sex".