Question

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2017 for $75,000. The land originally cost Leo $60,000. Compute the gain or loss on the intra-entity sale of land that Leo would recognize on their individual accounting records. Group of answer choices a) $15,000 loss b) $15,000 gain c) $50,000 loss d) $50,000 gain e) $65,000 gain.

Answer 1

Answer:

$15,000

Explanation:

In leo company books, the gain recognized would be $75,000 - $60,000 = $15,000 as they are selling the land $15,000 more than it initially cost them