S sells property with a $500 basis to B for $450, and B later sells the...
S sells property with a $500 basis to B for $450, and B later sells the property to a nonmember for $465. How much is S's intercompany item?
A. $0
B. $15 gain
C. $35 loss
D. $50 loss
Homework Answers
Between S and B
property's sale price by S to B= $450
Property basis= $ 450
Inter company profit / loss= Sale price minus the property basis
= $ 450- 500
=$ (50)
Loss = $ 50
Between B and non-member
Cost price from S = $ 450
Sales Price= $465
Profit / Loss= Sale price minus the property basis
=465- 450
=$15
Profit= $15
The intercompany item shall stand at total the Profit or Loss made by the company in the whole transaction ; that is the profit made by B from selling it to the non- member minus the loss incurred by S from selling it to B.
= $15 - $50
= ($35)
therefore, the total loss shall be of $35
the correct option among all shall be C .$35 loss
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