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Question 3 Partially correct Mark 105.00 out of 131.00 p Flag question Prepare consolidation spreadsheet for intercompany sale of equipment - Equity method Assume a parent company acquired its subsidiary on January 1, 2009, at a purchase price that was $320,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acquisition date. Of that excess, $220,000 was assigned to a Customer List that is being amortized over a 10-year period. The remaining $100,000 was assigned to Goodwill. In January of 2012, the wholly owned subsidiary sold Equipment to the parent for a cash price of $116,500. The subsidiary had acquired the equipment at a cost of $140,000 and depreciated the equipment over its 10-year useful life using the straight-line method (no salvage value). The subsidiary had depreciated the equipment for 4 years at the time of sale. The parent retained the depreciation policy of the subsidiary and depreciated the equipment over its remaining 6-year useful life. Financial statements of the parent and its subsidiary for the year ended December 31, 2013 follow in part f. below. The parent uses the equity method to account for its Equity Investment. The Customer List was amortized as part of the parent's equity method accounting. a. Prepare the journal entry that the subsidiary made to record the sale of the equipment to the parent, the journal entry that the parent made to record the purchase, and the entries for the year of sale. Note: Round answers to the nearest whole number. : . Journal Entries Description Debit Credit Subsidiary: Cash 116,500 Accumulated depreciation 56.000 Gain on sale of equipment 32.500 Property, plant & equipment 140,000 Parent: Property, plant & equipment 116,500 Cash 116.500 Olgain] ] Gain on sale of equipment OX Property, plant & equipment OX Accumulated depreciation [ldepr) Accumulated depreciation OX Depreciation Expense OX . 0 . e b. Compute the remaining portion of the deferred gain on January 1, 2013. Round your answer to nearest whole number. $ 23 X c. Show the computation to yield the $127,417 of Income (loss) from subsidiary reported by the parent for the year ended December 31, 2013. Note: Use a negative sign with an answer to indicate a reduction in the computation. Net income of subsidiary AAP Depreciation Deferred gain on intercompany sale Income (loss) from subsidiary 144.000 (22.000) 5,417 127,417