The following data applies to Questions 44-47:
On January 1, 20X7, Servant Company purchased a machine with an expected economic life of
five years. On January 1, 20X9, Servant sold the machine to Master Corporation and recorded
the following entry:
Cash 45,000
Accumulated Depreciation 28,000
Machine 70,000
Gain on Sale of Equipment 3,000
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 20X9. There is no
change in the estimated economic life of the equipment as a result of the intercorporate transfer.
44. Based on the preceding information, in the preparation of the 20X9 consolidated income
statement, depreciation expense will be:
A. Debited for \$1,000 in the consolidating entries.
B. Credited for \$1,000 in the consolidating entries.
C. Debited for \$15,000 in the consolidating entries.
D. Credited for \$15,000 in the consolidating entries.