During 2012, Von Co

question 82

Multiple Choice

During 2012, Von Co. sold inventory to its wholly-owned subsidiary, Lord Co. The inventory cost $30,000 and was sold to Lord for $44,000. From the perspective of the combination, when is the $14,000 gain realized?

• A) When the goods are sold to a third party by Lord.
• B) When Lord pays Von for the goods.
• C) When Von sold the goods to Lord.
• D) When the goods are used by Lord.
• E) No gain can be recognized since the transaction was between related parties.

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