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

question 41

Multiple Choice

Saddle Corporation is an 80%-owned subsidiary of Paso Company.On January 1, 2016, 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, 2019.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:

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