A few years ago,Locke Ltd.had purchased a machine from its wholly-owned subsidiary,Dubois Ltd. ,for $90,000.Locke has just sold the machine to an unrelated party for a $15,000 gain.At the time of the sale,there was still an unrealized gain of $50,000 from the purchase from Dubois.With this sale of the asset to the unrelated party,what is the amount of gain that should be recognized on Locke's consolidated financial statements?

Question

Quizplus · Accepted Answer

The gain recognized on the consolidated financial statements should include both the realized gain from the sale to the unrelated party ($15,000) and the previously unrealized gain from the intercompany transaction ($50,000), totaling $65,000.

A Few Years Ago,Locke Ltd