Parent Sold Land to Its Subsidiary for a Gain in 2007.The

question 98

Multiple Choice

Parent sold land to its subsidiary for a gain in 2007.The subsidiary sold the land externally for a gain in 2010.Which of the following statements is true?

• A)A gain will be reported on the consolidated income statement in 2007.
• B)A gain will be reported on the consolidated income statement in 2010.
• C)No gain will be reported on the 2010 consolidated income statement.
• D)Only the parent company will report a gain in 2010.
• E)The subsidiary will report a gain in 2007.

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Definitions:

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Non-Cash Expenses

Expenses recorded on the income statement that do not involve an actual cash flow, such as depreciation and amortization.

Millions

A numeral representation indicating one thousand times one thousand, or 1,000,000.

Non-Cash Expenses

Expenses recorded on an income statement that do not involve a direct cash outflow, such as depreciation.