Parent buys 80% interest in sub. On date of acquisition, Sub has on its books land at $15,000. The FV of the land on the acquisition date is $25,000 (so the consolidated balance sheet in year 1 has land at $25,000).
In a subsequent year, Sub sells land to a 3rd party for $20,000.
The sub will report a $5,000 gain. But, from a consolidated standpoint, is this a $5,000 loss? I'm conflicted, because the historical cost is $15,000, but from a consolidated view is there a "new" historical cost of $25,000?
In a subsequent year, Sub sells land to a 3rd party for $20,000.
The sub will report a $5,000 gain. But, from a consolidated standpoint, is this a $5,000 loss? I'm conflicted, because the historical cost is $15,000, but from a consolidated view is there a "new" historical cost of $25,000?