Question

Sterling Co. recently underwent a sell-off of its home gardening and repair subsidiary, Campbell Co., to an independent party. If Sterling recorded a gain of $62,755 on the carve out and received $85,540 cash for the sale, what are the net assets of Campbell?

a. $108,325b. $148,295c. $ 45,570d. $ 22,785e. None of the above

Answer 1

d. $22,785

Step-by-step explanation:

The net assets belonging to the subsidiary Campbell Co. are given by the difference in amount from cash received from the sale of the subsidiary and the recorded gains by Sterling Co. on the carve out:

`A= \$85,540-\$62,755=\$22,785`

The net assets of Campbell Co. are valued at $22,785.

The answer is alternative d.