On June 30, 2022, Past Company (Past) sold some land to its subsidiary, Sloan Ltd. (Sloan), for $380,000. The land had cost Past $200,000 when it was acquired three years previously.
The transaction was subject to income tax at a rate of 20%. On April 1, 2024, Sloan sold the land to an outside party for $475,000.
This transaction was also subject to income tax at a 20% rate.
Past owns 75% of the outstanding shares of Sloan and accounts for its investment using the cost method.
On December 31, 2023, the land account balance in the books of Past is $300,000 and in the books of Sloan is $340,000. No acquisition differential was allocated to land. What will be the amount of land in the consolidated balance sheet at December 31, 2023?
Multiple Choice
$460,000
$820,000.
$555,000
$640,000