Pal Co Owns 70% of the Outstanding Common Shares of Sadd

question 10

Multiple Choice

Pal Co. owns 70% of the outstanding common shares of Sadd Ltd. Sadd sold an asset to Pal at a loss. There is no evidence of impairment in the value of the asset sold to Pal. Which of the following statements about the loss is true?

• A)The loss should not be eliminated because this is an upstream sale.
• B)The loss should not be eliminated because there is no impairment in the value of the asset.
• C)The loss should not be eliminated because Pal does not own 100% of Sadd.
• D)The loss should be eliminated.

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