A Parent Sold Land to Its Partially Owned Subsidiary During

question 4

Multiple Choice

A parent sold land to its partially owned subsidiary during the year at a loss.The subsidiary 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 intercompany loss.
• B)the parent's separate operating income,plus the intercompany loss,plus the subsidiary's net income.
• C)the parent's separate operating income,minus the intercompany loss.
• D)the parent's separate operating income,minus the intercompany loss,plus the subsidiary's net income.

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Definitions:

Short-Term Stock Investments

Investments in stock intended to be held for a short duration, typically less than one year, for earning a quick profit.

Fair Value

The estimated market value of an asset or liability, based on current prices in an active market.

Stock Market

A public market for buying and selling equity securities and derivatives of companies, facilitating capital exchange between investors.

Trading Securities

Financial instruments that are bought and sold for the purpose of generating profit from short-term price movements.