Company a Holds 70 Percent of the Voting Shares of Company

question 38

Multiple Choice

Company A holds 70 percent of the voting shares of Company B.During 2008,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 basic equity method in accounting for its investment in Company B.
-Based on the information given,which eliminating entry relating to the intercorporate sale of land is to be entered in the consolidation workpaper prepared at the end of 2008?

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

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Definitions:

Gross Motor Skills

The abilities required to control the large muscles of the body for walking, running, sitting, and other activities.

Meaningful Patterns

Sequences or arrangements that hold significance or convey a particular message, often discerned through analysis or intuition.

Drawing

The act or skill of making images or diagrams by making lines and marks, especially with a pen or pencil, on paper.

Recognizable Objects

Items or shapes that can easily be identified or named due to their familiar characteristics.