Petunia Company Owns 100% of Sage Corporation

question 33

Multiple Choice

Petunia Company owns 100% of Sage Corporation.On January 1, 2014 Petunia sold equipment to Sage at a gain.Petunia had owned the equipment for four years and used a ten-year straight-line rate with no residual value.Sage is using an eight-year straight-line rate with no residual value.In the consolidated income statement, Sage's recorded depreciation expense on the equipment for 2014 will be reduced by

• A)10% of the gain on sale.
• B)12 1/2% of the gain on sale.
• C)80% of the gain on sale.
• D)100% of the gain on sale.