On January 1,2007,Servant Company Purchased a Machine with an Expected

question 40

Multiple Choice

On January 1,2007,Servant Company purchased a machine with an expected economic life of five years.On January 1,2009,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 2009.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 2009 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.

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Definitions:

Executive Power

The authority held by the executive branch of a government, responsible for implementing and enforcing laws and policies.

Trans-Continental Railroad

A railway system extending across a continent; in the U.S., it primarily refers to the railroad that linked the East and West coasts in 1869.

Congressional Approval

The act of validating, endorsing, or passing legislation or other measures by a legislative body, particularly the United States Congress.

Western Territories

Lands located to the west of the established states in the United States during the country's expansion, often associated with the frontier and westward expansion.