View the step-by-step solution to: 14. Chain Co. owned all of the voting common stock of Shannon

14. Chain Co. owned all of the voting co...
This question was answered on Feb 25, 2011. View the Answer
14. Chain Co. owned all of the voting common stock of Shannon Corp. The corporations' balance sheets dated December 31, 2010, include the following balances for land: for Chain--$416,000, and for Shannon--$256,000. On the original date of acquisition, the book value of Shannon's land was equal to its fair value. On April 4, 2011, Chain sold to Shannon a parcel of land with a book value of $65,000. The selling price was $83,000. There were no other transactions which affected the companies' land accounts during 2010. What is the consolidated balance for land on the 2011 balance sheet?
A. $672,000.
B. $690,000.
C. $755,000.
D. $737,000.
E. $654,000.
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Answer is A. $672,000 ($416,000+$256,000) Reason being intercompany gain is eliminated on the income statement in the year and t... View the full answer

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