During 2019, Brooke sold to its subsidiary, Cabana, land with a book value of $507,000. The selling price was $700,000 In its pre-consolidation accounting records, Brooke should: a. Recognize a "Gain on Sale of Land" of $193,000 b. Defer recognition of a "Gain on Sale of Land" entry until Cabana sells the land to a third party c. Recognize the gain over the asset's life d. Not recognize a gain

During 2019, Brooke sold to its subsidiary, Cabana, land with a book value of $507,000. The selling price was $700,000 In its pre-consolidation accounting records, Brooke should: a. Recognize a "Gain on Sale of Land" of $193,000 b. Defer recognition of a "Gain on Sale of Land" entry until Cabana sells the land to a third party c. Recognize the gain over the asset's life d. Not recognize a gain

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

During 2019, Brooke sold to its subsidiary, Cabana, land with a book value of $507,000. The selling
price was $700,000
In its pre-consolidation accounting records, Brooke should:
a. Recognize a "Gain on Sale of Land" of $193,000
b. Defer recognition of a "Gain on Sale of Land" entry until Cabana sells the land to a third party
c. Recognize the gain over the asset's life
d. Not recognize a gain

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