Equipment Costing $10 000 Was Sold by One Entity Within

question 24

Multiple Choice

Equipment costing $10 000 was sold by one entity within a group to another for $4000. Accumulated depreciation at date of sale was $3000. The consolidation entry will contain the following adjustment to the amount of the Equipment:

• A) Increase of $1000
• B) Reduction of $1000
• C) Increase of $3000
• D) Reduction of $3000.

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Definitions:

Process Cost Accounting

An accounting method used to assign production costs to products based on processes or departments, useful in mass production environments.

Materials Account

An account used in bookkeeping to track costs of raw materials during an accounting period.

FIFO Method

The FIFO (First-In, First-Out) method is an inventory valuation strategy where the oldest inventory items are sold or used first.

Weighted Average Method

The weighted average method is an inventory costing approach that calculates the cost of goods sold and ending inventory based on the average cost of all items available for sale during the period.