Roslynn Ltd. is a subsidiary of Goodale Co. Roslynn sold a machine to Goodale for a $50,000 gain. Goodale has now sold the machine to an unrelated party for a $20,000 gain. At the time of the sale, $35,000 of the profit on the sale from Roslynn was still unrealized. For consolidation purposes, what is the amount of gain that must be recognized on the sale of the machine?

Question

Quizplus · Accepted Answer

For consolidation purposes, the entire gain of $55,000 must be recognized. This includes the $50,000 gain from Roslynn's sale to Goodale and the $20,000 gain from Goodale's sale to an unrelated party, minus the $15,000 of the profit ($35,000 - $20,000) that was realized upon the final sale.