On January 1, 2006, Poe Corp. sold a machine for $900,000 to Saxe Corp., its wholly owned subsidiary. Poe paid $1,100,000 for this machine, which had accumulated depreciation of $250,000. Poe estimated a $100,000 salvage value and depreciated the machine on the straight-line method over twenty years, a policy which Saxe continued. In Poe’s December 31, 2006 consolidated balance sheet, this machine should be included in cost and accumulated depreciation as
|
Cost |
Accumulated depreciation |
|
|
a. |
$1,100,000 |
$300,000 |
|
b. |
$1,100,000 |
$290,000 |
|
c. |
$ 900,000 |
$ 40,000 |
|
d. |
$ 850,000 |
$ 42,500 |