Wallton Corporation owns 70 percent of the outstanding stock of Hastings, Incorporated. On January 1, 2009, Wallton

Question:

Wallton owns 70 percent of the outstanding stock of Hastings, Incorporated. On January 1, 2009, Wallton acquired a building with a 10-year life for $300,000. Wallton anticipated no , and the building was to be depreciated on the straight-line basis. On January 1, 2011, Wallton sold this building to Hastings for $280,000. At that time, the building had a remaining life of eight years but still no expected . In preparing for 2011, how does this transfer affect the computation of consolidated net income?
a. Income must be reduced by $32,000.
b. Income must be reduced by $35,000.
c. Income must be reduced by $36,000.
d. Income must be reduced by $40,000.

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