PeopleMag sells a plot of land for $100,000 to Seven Star Company, its 100 percent owned subsidiary, on January 1, 20X7. The cost of the land was $75,000, when it was purchased in 20X6. In 20X9, Seven Star sells the land to Hot Properties Incorporated an unrelated entity, for $120,000. How is the land reported in the consolidated financial statements for 20X7, 20X8 and 20X9?

Q: Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete…

A: Given Fair market value of land = $617,500 Basis in tea company stock = $407,500 Land has basis to…

Q: Felix pays $1,000,000 to acquire 80% of Unger, Assume there is no control premium. At the…

A: Value acquires = FVNAA of Unger x 80% = $1,100,000 x 80% = $880,000

Q: Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF).…

A: As per IRS tax basis in a property is fair market value of assets received on liquidation.

Q: Fast owns 100% of Slow and had recorded $700,000 of goodwill from acquiring Slow many years ago. It…

A: Goodwill: Goodwill is the amount recorded in the balance sheet when one entity purchases another…

Q: Domestic

A: The objective of this question is to calculate the corporation's adjusted basis in each of the…

Q: On January 1, 20X1, Pepper purchased 70% interest in Salt for $420K.   At the time of the purchase,…

A: We know that in consolidation or business combination acquisition method is used for all accounting…

Q: shoe owns 100% of foot in an acquisition completed 3 years ago. it is now december 31, 2012. foot…

A: Note: Since you have posted a question with multiple sub-parts, we will solve first three subparts…

Q: Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the…

A: SOLUTION-   WORKING NOTE- GAIN ON ASSET  SALE =  ($80 MILLION - $ 48 MILLION)…

Q: On January 1, 2016, Cayce Corporation acquired 100 percent of Simbel Company for consideration…

A:

Q: Joey Corporation acquired 100 percent of Legoria Company’s common stock on January 1, 2021 for cash…

A: Elimination entries refer to adjustments made to a parent company's financial statements to remove…

Q: Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the…

A: The adjusted basis is the reported beginning cost of an asset or security that has undergone a…

Q: Padre holds 100 percent of the outstanding shares of Sonora. On January 1, 2022, Padre transferred…

A: Journal Entries Journal Entries are used to record all the financial transactions in a business. It…

Q: Jeff Stein incorporated his sole proprietorship by transferring inventory, a building, and land to…

A: Solution A- Jeff realizes a net gain of $105000 on this transfer, computed as follows : Fair market…

Q: Consolidated net income will be the same as it would have been had the intercompany sale not…

A: When a company decides to take over another company, The Parent Company is required to prepare the…

Q: P Company owns 90% of the outstanding common stock of S Company. On January 1, 2020, S Company sold…

A: A journal is a detailed account that records all the financial transactions of a business, to be…

Q: Brooks owns 20% of Ghost Inc. The following information pertains to an intra entity transfer. What…

A: A journal entry is a form of accounting entry that is used to report a business transaction in a…

Q: Based on event #1 above, what would be the ending inventory balance on the December 31, 2X01…

A: Consolidated financial statement is the statement which has been prepared by the parent company at…

Q: On January 1, 20x1, Entity A acquires all the assets and liabilities of Entity B for P2,000,000.…

A: Working Note #1 Computation of consideration transferred: Consideration transferred=P2,000,000 -Off…

Q: Pogo Corporation acquired a 75% interest in Sperry Corporation on January 1, 2011 at a cost equal to…

A: Explanation: The Gain on the sale of the land on the consolidated income statement is calculated by…

Q: riod, Venus sold to Highlands a noncurrent asset for P 1,000.  The asset's original cost was P 2,500…

A: Non-controlling interest: Non-controlling interest can be defined as the position of the minority…

Q: Parent purchases Land on January 1, 2009 for $100,000. On January 1, 2010 parent sells land to 100%…

A: Assets: Any things or property owned by business called Assets Example: Land , Buildings , Patents…

Q: 4 Packard Corporation transferred its 100 percent interest to State Company as part of a complete…

A: Corporation is an organization for a group of people or a for an individual registered by the…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.