Patch Corporation purchased land from Sub1 Corporation for $350,000 on December 3, 20X5. This purchase followed a series of transactions between Patch-controlled subsidiaries. On January 23, 20X5, Sub3 Corporation purchased the land from a nonaffiliate for $240,000. It sold the land to Sub2 Company for $220,000 on July 15, 20X5, and Sub2 sold the land to Sub1 for $305,000 on September 5, 20X5. Patch has control of the following companies: Subsidiary Level of Ownership20X5 Net Income Sub3 60 percent $60,000 Sub2 90 percent $140,000 Sub1 70 percent $90,000 Patch reported income from its separate operations of $345,000 for 20X5.Based on the preceding information, what amount of gain or loss on the sale of land should be reported in the consolidated income
statement for 20X5?
A. $110,000 gain
B. $130,000 gain
C. $0
D. $20,000 loss
Answer: C
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