11.

scenario a: Assume that on July 1, 2019, Wal-Mart owns certain assets that have a book value of $350 million and a fair value of $800 million. Also assume that Wal-Mart gave these assets to its investors on July 1, 2019 and received nothing in return.

a. Assume that the asset in question is a controlling investment in a subsidiary. What is the effect of this transaction on Wal-Marts reported earnings for the year ended December 31, 2019? indicate the amount and the direction (gain/loss/no effect)

b. Assume the same facts as Scenario A, except the assets have a fair value of $200 million. Assume that the assets in question are its cash registers. What is the effect of this transaction on Wal-Marts reported earnings for the year ended December 31, 2019? indicate the amount and the direction (gain/loss/no effect)

c. Assume that the asset in question is a controlling investment in a subsidiary. What is the effect of this transaction on Wal-Marts reported earnings for the year ended December 31, 2019? indicate the amount and the direction (gain/loss/no effect)