A Wholly Owned Subsidiary Sold Land to Its Parent During

question 3

Multiple Choice

A wholly owned subsidiary sold land to its parent during the year at a gain.The parent continues to hold the land at the end of the year.The amount to be reported as consolidated net income for the year should equal:

• A)the parent's separate operating income,plus the subsidiary's net income.
• B)the parent's separate operating income,plus the subsidiary's net income,minus the intercompany gain.
• C)the parent's separate operating income,plus the subsidiary's net income,plus the intercompany gain.
• D)the parent's net income,plus the subsidiary's net income,minus the intercompany gain.

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Definitions:

Compensatory Damages

Payments awarded to a plaintiff to compensate for harm, loss, or injury suffered due to another's wrongful act.

Liquidated Damages

A predetermined amount of money that must be paid as compensation for failure to fulfill a contract, serving as a penalty or deterrent against breach.

Mitigate Damages

The legal requirement or effort to minimize the harm or loss suffered as a result of a breach of contract or other wrongdoing.

Non-Disclosure Agreement

A legal contract between at least two parties that outlines confidential material, knowledge, or information that parties wish to share with one another for certain purposes but wish to restrict access to or by third parties.