Use the Following Information to Answer the Question(s) Below $$\begin{array} { | l | l | } \hline\text { Gain on Sale } & \text { Income from Brush } \\\hline\$ \$ 5,700 & \$ 59,400\\\hline\end{array}$$

question 27

Multiple Choice

Use the following information to answer the question(s) below.

Bird Corporation purchased an 80% interest in Brush Corporation on July 1, 2013 at its book value, and on January 1, 2014 its Investment in Brush account was $300,000, equal to its book value. Brush's net income for 2014 was $99,000 (earned uniformly) ; no dividends were declared. On March 1, 2014, Bird reduced its interest in Brush by selling a 20% interest, one-fourth of its investment, for $84,000.

-If Bird uses a "beginning-of-the-year" sale assumption,its gain on sale and income from Brush for 2014 will be

• A) \[\begin{array} { | l | l | }
• \hline\text { Gain on Sale } & \text { Income from Brush } \\
• \hline\$ \$ 5,700 & \$ 59,400\\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Gain on Sale } & \text { Income from Brush } \\
• \hline\$ \$ 5,700 & \$ 62,700\\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline\text { Gain on Sale } & \text { Income from Brush } \\
• \hline\$ 9,000 & \$ 59,400\\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline\text { Gain on Sale } & \text { Income from Brush } \\
• \hline\$ 9,000 & \$ 62,700\\
• \hline
• \end{array}\]

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Definitions:

Repossesses

The action of taking back possession of property, typically by a seller or lender, from the buyer or borrower due to non-compliance with the terms of sale or loan.

Consequential Damages

Damages that do not directly arise from the breach of a contract but result from the breach's indirect effects.

Inventory

The total amount of goods and materials on hand available for sale to customers in the course of business operations.

Consumer Goods

Items bought for personal use or consumption, including household products, food, and clothing.