Which of the following events is an intercompany transaction?
A)a capital contribution
B)accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting
C)dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation
D)a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group

Question

Quizplus · Accepted Answer

An intercompany transaction is a transaction between two or more entities within the same group or ownership. Option B is an example of an intercompany transaction because it involves two group members - one lends money to the other and both use the accrual method of accounting. The other options involve transactions between a parent company and its subsidiary or non-member of the group and are not intercompany transactions.

Which of the Following Events Is an Intercompany Transaction