Stroud Corporation is an 80%-owned subsidiary of Pennie, Inc., acquired by Pennie several years ago. On January 1, 20X2, Pennie sold land with a book value of $60,000 to Stroud for $90,000. Stroud resold the land to an unrelated party for $100,000 on September 26, 20X3. The land will be included in the December 31, 20X2 consolidated balance sheet of Pennie, Inc. and Subsidiary at ____.

Question

Quizplus · Accepted Answer

The gain on the sale of the land is deferred in the year of the intercompany sale and realized in the year that the land is sold to an outside party. The land will be carried on the consolidated balance sheet at the amount by which it was acquired from the outside party, in this case, $60,000.

Stroud Corporation Is an 80%-Owned Subsidiary of Pennie, Inc