Granfield company has a piece of manufacturing equipment with a book value of $36,500 and a remaining useful life of four years. at the end of the four years the equipment will have a zero salvage value. the market value of the equipment is currently $21,300. granfield can purchase a new machine for $113,000 and receive $21,300 in return for trading in its old machine. the new machine will reduce variable manufacturing costs by $18,300 per year over the four-year life of the new machine. the total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:

Paar corporation bought 100 percent of kimmel, inc., on january 1, 2012. on that date, paar’s equipment (10-year life) has a book value of $420,000 but a fair value of $520,000. kimmel has equipment (10-year life) with a book value of $272,000 but a fair value of $400,000. paar uses the equity method to record its investment in kimmel. on december 31, 2014, paar has equipment with a book value of $294,000 but a fair value of $445,200. kimmel has equipment with a book value of $190,400 but a fair value of $357,000. the consolidated balance for the equipment account as of december 31, 2014 is $574,000. what would be the impact on consolidated balance for the equipment account as of december 31, 2014 if the parent had applied the initial value method rather than the equity method? the balance in the consolidated equipment account cannot be determined for the initial value method using the information given. the consolidated equipment account would have a higher reported balance. the consolidated equipment account would have a lower reported balance. no effect: the method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.