Parrot Company Owns All the Outstanding Voting Stock of Southern

question 40

Multiple Choice

Parrot Company owns all the outstanding voting stock of Southern Manufacturing.On January 1,2014,Parrot sold machinery to Southern at its book value of $24,000.Parrot had the machinery three years before selling it and used an eight-year straight-line depreciation method,with zero salvage value.Southern will use the straight-line depreciation method,and assumes the machine has five years remaining and no salvage value.In the 2014 consolidating working papers,the depreciation expense

• A)required no adjustment.
• B)decreased by $4,800.
• C)increased by $4,800.
• D)increased by $8,000.

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