On 1/1/X1 Peck Sells a Machine with a $20,000 Book

question 19

Multiple Choice

On 1/1/X1 Peck sells a machine with a $20,000 book value to its subsidiary Shea for $30,000. Shea intends to use the machine for 4 years, which was the remaining life that Peck had at the time of the sale. Neither company had assigned a salvage value to the machine. On 12/31/X2 Shea sells the machine to an outside party for $14,000. What amount of gain or (loss) for the sale of assets is reported on the consolidated financial statements in 20X2?

• A)loss of $6,000
• B)loss of $1,000
• C)gain of $4,000
• D)gain of $14,000

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