Intercompany sale of depreciable assets

Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiarys voting common stock. On the date of acquisition, the fair value of the subsidiarys net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $518,400 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $432,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parents stand-alone income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $540,000 . The subsidiarys recorded net income is $108,000.

Based on this information, determine the balance for Consolidated building (net of accumulated depreciation):

Select one:

a. $518,400

b. $360,000

c. $324,000

d. $432,000