Company a Holds 70 Percent of the Voting Shares of Company

question 10

Multiple Choice

Company A holds 70 percent of the voting shares of Company B. During 20X8, Company B sold land with a book value of $125,000 to Company A for $150,000. Company A continues to hold the land at the end of the year. The companies file separate tax returns and are subject to a 40 percent tax rate. Assume that Company A uses the fully adjusted equity method in accounting for its investment in Company B.
-Based on the information given,which consolidating entry relating to the intercorporate sale of land is to be entered in the consolidation worksheet prepared at the end of 20X8?

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Goods

Physical items that are produced and can be bought, sold, or traded.

Sweatshop Labor

Work that is performed in poor conditions for low pay and often violates labor laws.

Working Conditions

The environment, terms, and circumstances under which an individual is employed, including hours, physical aspects, legal rights, and responsibilities.

Tariff of Abominations

The nickname given to the Tariff Act of 1828, which imposed high duties on imports and was highly controversial, particularly in the Southern United States, which felt it economically disadvantaged them.