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Alona [7]
3 years ago
11

Market Corporation owns 100% of Subsidiary Corporation's stock. Market Corporation completely liquidates Subsidiary Corporation,

receiving land with a $400,000 adjusted basis and a $500,000 FMV in exchange for Subsidiary stock, which has a $300,000 adjusted basis. Market Corporation has a basis in the land ofa. $300,000.b. $400,000.c. $500,000.d. None of these
Business
1 answer:
kykrilka [37]3 years ago
6 0

Answer:

b. $400,000

Explanation:

According to the historical cost principle, the land or fixed assets should be reported in the financial statement with the purchase price or historical price.

In the given situation, the land receiving value is $400,000 and its fair market value or FMV is $500,000 and exchange value is $300,000

So, here the land should be recorded at $400,000. Hence, we ignored the fair market value and the exchanged value

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