Impact on net consolidated income created by this transfer

Assignment Help Financial Accounting

Reference no: EM13746840

ABC owns 100% of the outstanding shares of DEF Co. On January 1, Year One, ABC transfers a building to DEF for its fair value of $500,000. At that date, ABC was reporting this building at a net book value of $400,000 with no residual value and a remaining life of twenty years. In taking the individual records of these two companies at the end of Year One and turning them into consolidated statements, what is the impact on net consolidated income created by this transfer?

A. There is no impact when consolidated net income is computed.

B. A reduction of $95,000 is made to arrive at consolidated net income.

C. A reduction of $72,000 is made to arrive at consolidated net income.

D. A reduction of $48,000 is made to arrive at consolidated net income.

Reference no: EM13746840

Questions Cloud

Expected real rate of return on the ten- year : Estimate the expected real rate of return on the ten- year U. S. Treasury bond. If the real rate of return is expected to be the same for the thirty- year bond as for the ten- year bond, estimate the average annual inflation rate expected by invest..

Customer in exchange for customers past due account : How to journalize a 2-month, 6%, $203 million note receivable from a large corporate customer in exchange for the customer's past due account? Note: the company made the proper year-end adjusting entry for the interest on this note. Also, how to jour..

What MACRS convention applies to the new car : On February 15, 2013, Leo purchased and placed in service a new car that cost $23,750. The business use percentage for the car is always 100%. He does take the additional first-year depreciation. What MACRS convention applies to the new car?

Who is the director of the battleship potemkin : Who is The director of The Battleship Potemkin. Which European avant-garde movement of the silent era did not arise within a commercial film industry?

Impact on net consolidated income created by this transfer : ABC owns 100% of the outstanding shares of DEF Co. On January 1, Year One, ABC transfers a building to DEF for its fair value of $500,000. At that date, ABC was reporting this building at a net book value of $400,000 with no residual value and a rema..

What types of medical expenses are deductible : What types of medical expenses are deductible? Explain the rules governing medical deductions. What limitations are applied? Provide examples and explain

Consolidated balance sheet for current assets : During the current year, ABC Corporation sold inventory costing $80,000 to DEF for $100,000. ABC owns 80 percent of the outstanding shares of DEF Corporation. DEF has paid ABC and DEF still has all of this inventory on the last day of the year.

Internal and external equity comparison : Internal and External Equity Comparison-Explain how each plan supports that organization's total compensation objective and the relationship of the organization's financial situation to its plan

What is the carrying value of the bonds : Garland Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2013. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31. Garland uses the straight-line method of amortization. What i..

User Account

All Pages