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MM Company holds 60% of BB Corporation's voting shares. BB has developed a new type of production equipment that appears to be quite marketable. It
MM Company holds 60% of BB Corporation's voting shares. BB has developed a new type of production equipment that appears to be quite marketable. It spent 40000 in developing the equipment: however, MM agreed to purchase the production rights for the machine for 100000. If the intercompany sale occurred on January 1, 20x4, and the production rights are expected to have value for five years, at what amount should the rights be reported in the consolidated balance sheet for December 31, 20x4?
a. 0
b. 32000
c. 80000
d. 100000
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