Advanced Accounting Chapter 5 exam Graded A+

Advanced Accounting Chapter 5 exam Graded A+ On November 8, 2018, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. For consolidated financial statement reporting purposes, when must the gain on the sale of the land be recognized? A) Proportionately over a designated period of years. B) When Wood Co. sells the land to a third party. C) No gain may be recognized. D) As Wood uses the land. E) When Wood Co. begins using the land productively. - ANSWERB During 2017, Von Co. sold inventory to its wholly-owned subsidiary, Lord Co. The inventory cost $30,000 and was sold to Lord for $44,000. For consolidation reporting purposes, when is the $14,000 intra-entity gross profit recognized? A) When goods are transferred to a third party by Lord. B) When Lord pays Von for the goods. C) When Von sold the goods to Lord. D) When Lord receives the goods. E) No gain can be recognized since the transfer was between related parties. - ANSWERA