Use the Following Information to Answer the Question(s) Below

question 39

Multiple Choice

Use the following information to answer the question(s) below.
On December 31, 2011, Pinne Corporation sold equipment with a three-year remaining useful life and a book value of $21,000 to its 70%-owned subsidiary, Sull Company, for a price of $27,000. Pinne bought the equipment four years ago for $49,000. The salvage value is zero. Straight-line depreciation is used by both companies.
-After eliminating/adjusting entries are prepared, what was the intercompany sale impact on the consolidated financial statements for the year ended December 31, 2011?

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Definitions:

Price Floor

A government or regulatory imposed minimum price above the equilibrium price, preventing prices from dropping too low.

Usury Laws

Regulations designed to protect consumers by capping the interest rate that lenders can charge on credit.

Loanable Funds

The supply of money that savers have made available to borrowers.

Usury Laws

Regulations governing the maximum interest rate that can be charged on loans, intended to protect consumers from excessively high rates.