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  3. mortar corporation acquired 80 percent of granite

Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7....

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Accounting

Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1, 20X7. On December 31, 20X8, Mortar received $370,000 from Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000 and had been depreciating it over 10 Years and no salvage value. After the sale, the equipment is expected to have a 5-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis. Based on the preceding information, the gain on sale of the equipment recorded by Mortar for 20X8 that will be eliminated is:

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