At its inception, Peacock Company purchased land for $50,000 and a building for $220,000. After exactly 4 years, it transferred these assets and cash of $75,000 to a newly created subsidiary, Selvick Company, in exchange for 25,000 shares of Selvick's $5 par value stock. Peacock uses straight-line depreciation. When purchased, the building had a useful life of 20 years with no expected salvage value. An appraisal at the time of the transfer revealed that the building has a fair value of $250,000.Based on the information provided, at the time of the transfer, Selvick Company should record
A. the building at $176,000 with no accumulated depreciation.
B. the building at $250,000 with no accumulated depreciation.
C. the building at $220,000 with no accumulated depreciation.
D. the building at $220,000 and accumulated depreciation of $44,000.
Answer: D
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