Parent sold land to its subsidiary resulting in a gain in 2016, the year of transfer. The subsidiary sold the land to an unrelated third party for a gain in 2019. Which of the following statements is true?
A. Only the parent company will recognize a gain in 2019.
B. A gain will be recognized in the consolidated income statement in 2019.
C. The subsidiary will recognize a gain in 2016.
D. No gain will be recognized in the 2019 consolidated income statement.
E. A gain will be recognized in the consolidated income statement in 2016.
Answer: B
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