Question
On December 31, 2020, Corella Corporation sold equipment with a three-year remaining useful life and a book value of $21,000 to its 70%-owned subsidiary Hollow
On December 31, 2020, Corella Corporation sold equipment with a three-year remaining useful life and a book value of $21,000 to its 70%-owned subsidiary Hollow Company for a price of $27,000. Corella bought the equipment four years ago for $49,000.
What was the intercompany sale impact on the consolidated financial statements for the year ended December 31, 2020?
| Consolidated Net Income | Consolidated Net Assets | |
| A. | No effect. | No effect. |
| B. | No effect. | Increased. |
| C. | Decreased. | Decreased. |
| D. | Decreased. | No effect. |
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Cost-Benefit Analysis
Authors: Euston Quah, E.J. Mishan
5th Edition
0415350379, 9780415350372
