Pit Corporation owns 85% of Stop Company’s outstanding common stock. On 01/01/18, Pit sold a used piece of equipment to Stop in exchange for $275,000 cash. Pit’s original cost of the equipment was $820,000 and accumulated depreciation at 01/01/18 was $610,000. The remaining life of the equipment is 5 years, and Stop will use that same useful life. Both companies use the straight-line method of depreciation. Prepare below are the journal entries prepared by Pit and Stop during 2018
Prepare the 12/31/18 consolidation worksheet entry related to these transactions.