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

Question

Quizplus · Accepted Answer

The gain on the intercompany sale of land between the subsidiary and its parent creates a consolidated elimination entry. This means that the gain is eliminated from the consolidated financial statements. Therefore, the amount to be reported as consolidated net income for the year should include the parent's separate operating income, plus the subsidiary's net income, minus the intercompany gain.

A Wholly Owned Subsidiary Sold Land to Its Parent During