Wallton Corporation owns 70 percent of the outstanding stock of Hastings, Incorporated. On January 1, 2008, Wallton
Question:
Wallton Corporation owns 70 percent of the outstanding stock of Hastings, Incorporated. On January 1, 2008, Wallton acquired a building with a 10-year life for $300,000. Wallton anticipated no salvage value, and the building was to be depreciated on the straight-line basis. On January 1, 2010, Wallton sold this building to Hastings for $280,000. At that time, the building had a remain¬ ing life of eight years but still no expected salvage value. In preparing financial statements for 2010, how does this transfer affect the computation of consolidated net income? LO8
a. Income must be reduced by $32,000.
b. Income must be reduced by $35,000.
c. Income must be reduced by $36,000.
d. Income must be reduced by $40,000.
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle