Consolidated net income will be the same as it would have been had the intercompany sale not occurred.
On January 1, 20X1 Bullock, Inc. sells land to its 80%-owned subsidiary, Humphrey Corporation, at a $20,000 gain. The land is sold by Humphrey to an outside party in 20X3. What is the effect of the intercompany sale of land on 20X3 consolidated net income?
|
a. |
Consolidated net income will be the same as it would have been had the intercompany sale not occurred. |
|
b. |
Consolidated net income will be $20,000 less than it would have been had the intercompany sale not occurred. |
|
c. |
Consolidated net income will be $16,000 less than it would have been had the intercompany sale not occurred. |
|
d. |
Consolidated net income will be $20,000 greater than it would have been had the intercompany sale not occurred. |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
