Parent Corporation purchased land from S1 Corporation for $220,000 on December 26, 20X8. This purchase followed a series of transactions between P-controlled subsidiaries. On February 15, 20X8, S3 Corporation purchased the land from a nonaffiliate for $160,000. It sold the land to S2 Company for $145,000 on October 19, 20X8, and S2 sold the land to S1 for $197,000 on November 27, 20X8. Parent has control of the following companies: Parent reported income from its separate operations of $200,000 for 20X8.
Based on the preceding information, what amount of gain or loss on sale of land should be reported in the consolidated income statement for 20X8?
A) $60,000
B) $0
C) $75,000
D) $23,000

Question

Parent Corporation purchased land from S1 Corporation for $220,000 on December 26, 20X8. This purchase followed a series of transactions between P-controlled subsidiaries. On February 15, 20X8, S3 Corporation purchased the land from a nonaffiliate for $160,000. It sold the land to S2 Company for $145,000 on October 19, 20X8, and S2 sold the land to S1 for $197,000 on November 27, 20X8. Parent has control of the following companies:  Parent reported income from its separate operations of $200,000 for 20X8.
Based on the preceding information, what amount of gain or loss on sale of land should be reported in the consolidated income statement for 20X8?
A) $60,000 
B) $0 
C) $75,000 
D) $23,000

Quizplus · Accepted Answer

The Answer of Parent Corporation purchased land from S1 Corporation for $220,000 on December 26, 20X8. This purchase followed a series of transactions between P-controlled subsidiaries. On February 15, 20X8, S3 Corporation purchased the land from a nonaffiliate for $160,000. It sold the land to S2 Company for $145,000 on October 19, 20X8, and S2 sold the land to S1 for $197,000 on November 27, 20X8. Parent has control of the following companies:  Parent reported income from its separate operations of $200,000 for 20X8.
Based on the preceding information, what amount of gain or loss on sale of land should be reported in the consolidated income statement for 20X8?
A) $60,000 
B) $0 
C) $75,000 
D) $23,000

Parent Corporation Purchased Land from S1 Corporation for $220,000 on December