On June 30, 2012, Parent Company Sold Some Land to Its

question 13

Multiple Choice

On June 30, 2012, Parent Company sold some land to its subsidiary for $240,000. The land had cost Parent Company $120,000 when it was acquired three years previously. The transaction was subject to income tax at a rate of 20%. On June 30, 2014, the subsidiary sold the land to an outside party for $275,000. This transaction was also subject to income tax at a 20% rate. Parent Company owns 75% of the outstanding shares of its subsidiary and accounts for its investment using the cost method. On December 31, 2012, the land account balance in the books of Parent Company is $300,000 and in the books of the subsidiary is $300,000. No acquisition differential was allocated to land. What will be the amount of land in the consolidated balance sheet at December 31, 2012?

• A) $480,000.
• B) $504,000.
• C) $510,000.
• D) $600,000.

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Definitions:

Resistive Current

The current that flows through a circuit with only resistive elements, directly proportional to the voltage across and inversely proportional to the resistance.

RC Parallel Circuit

An electrical circuit that consists only of a resistor (R) and a capacitor (C) connected in parallel, affecting the overall impedance and phase angle.

RC Parallel Circuit

A type of electrical circuit where resistor(s) and capacitor(s) are connected in parallel, affecting the charging and discharging rate of the capacitor.

Capacitive Reactance

Opposition to AC flow in capacitors, varying inversely with the frequency of the operation and the capacitance value.