QUESTION 18

1. Parent owned 80% of Sub. In Year 1, Parent sold a trademark with a book value of $400,000 to Sub. The selling price was $700,000. The trademark has an indefinite useful life. At what amount should the trademark be reported in the Year 1 ending consolidated balance sheet?

   	a.	$560,000
   	b.	$320,000.
   	c.	$700,000
   	d.	$400,000.

3 points

1. Using the same facts as in the previous question. Sub sells the trademark in Year 3 for $1,000,000 in cash. In Year 3, the gain on sale in consolidated net income should be:

   	a.	$300,000
   	b.	$600,000
   	c.	$440,000
   	d.	$680.000