On January 1, 2012, Parent Company purchased 32,000 of the 40,000 outstanding common shares of Sub Company for $1,520,000. On January 1, 2016, Parent Company sold 4,000 of its shares of Sub Company on the open market for $90 per share. Sub Company's stockholders' equity on January 1, 2012, and January 1, 2016, was as follows: The difference between implied and book value is assigned to Sub Company's land. The amount of the gain on sale of the 4,000 shares that should be recorded on the books of Parent Company is:
A) $68,000.
B) $170,000.
C) $96,000.
D) $200,000.

Question

On January 1, 2012, Parent Company purchased 32,000 of the 40,000 outstanding common shares of Sub Company for $1,520,000. On January 1, 2016, Parent Company sold 4,000 of its shares of Sub Company on the open market for $90 per share. Sub Company's stockholders' equity on January 1, 2012, and January 1, 2016, was as follows:  The difference between implied and book value is assigned to Sub Company's land. The amount of the gain on sale of the 4,000 shares that should be recorded on the books of Parent Company is:
A) $68,000. 
B) $170,000. 
C) $96,000. 
D) $200,000.

Quizplus · Accepted Answer

The Answer is B

On January 1, 2012, Parent Company Purchased 32,000 of the 40,000