A wholly owned subsidiary sold land to its parent during the year at a loss. The

Question

A wholly owned subsidiary sold land to its parent during the year at a loss. The parent continues to hold the land at the end of the year. The amount to be reported as consildated 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 loss.

c- the parent's separate operating income, plus the subsidiary's net income, plus the intercompany loss.

d- the parent's net income, plus the subsidiary's net income, minus the intercompany loss.

Explanation / Answer

Answer

The amount to be reported as consildated net income for the year should equal to the parent's separate operating income, plus the subsidiary's net income, plus the intercompany loss.

As We have to show consolidated Income in the Books of accounts and it should include (Parent Net Income + Subsidary Net Income + Loss in the Intercompany Transaction)

Answer = C

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