Saddle Corporation Is an 80%-Owned Subsidiary of Paso Company

question 30

Multiple Choice

Saddle Corporation is an 80%-owned subsidiary of Paso Company. On January 1, 20X1, Saddle sold Paso a machine for $50,000. Saddle's cost was $60,000 and the book value was $40,000. The machine had a 5-year remaining life at the time of the sale. A consolidated balance sheet only is being prepared on December 31, 20X3. The retained earnings of the controlling interest requires which of the following adjustments?

• A)Debit $4,000
• B)Debit $6,000
• C)Debit $3,200
• D)Debit $4,800

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Definitions:

Quantity Supplied

The total amount of a good or service that sellers are willing and able to sell at a given price level, at a specific time.

Bushels Of Wheat

A measure of volume used chiefly in the U.S. to quantify the production or trading of wheat and other grains.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity demanded, leading to market stability.

Quantity Supplied

The supply of goods or services that vendors are prepared and capable of offering at an established price over a specified duration.