Parent Sold Land to Its Subsidiary for a Gain in 2010

question 31

Multiple Choice

Parent sold land to its subsidiary for a gain in 2010. The subsidiary sold the land externally for a gain in 2013. Which of the following statements is true?

• A) A gain will be reported in the consolidated income statement in 2010.
• B) A gain will be reported in the consolidated income statement in 2013.
• C) No gain will be reported in the 2013 consolidated income statement.
• D) Only the parent company will report a gain in 2013.
• E) The subsidiary will report a gain in 2010.

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Definitions:

Service Retailer

A business that sells services rather than physical goods, providing intangible products to customers.

Nail Salon

A specialized beauty salon that provides nail care services such as manicures, pedicures, and nail enhancements.

Extreme-value Retailers

Stores that specialize in offering a wide range of products at exceptionally low prices, targeting cost-conscious consumers.

Low-income Consumers

Individuals or households with limited financial resources that affect their purchasing power and consumption patterns.