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In January 2008, S Company, an 80% owned subsidiary of P Company, sold equipment to P Company for $1,980,000. S Company's original cost for this equipment was $2,000,000 and had accumulated depreciation of $200,000. P Company continued to depreciate the equipment over its 9 year remaining life using the straight-line method. This equipment was sold to a third party on January 1, 2011 for $1,440,000. What amount of gain should P Company record on its books in 2011?

a) $60,000.

b) $120,000.

c) $240,000.

d) $360,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9449375

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