Big wheels inc decided to split-off its subsidiary tractor, Ask an Expert

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Big Wheels Inc. decided to split-off its subsidiary Tractor Co. On January 2014, Big Wheels Inc. tendered 18,000 shares of Tractor Co.’s $5 par value stock to its current shareholders in a non pro rata distribution. On the day of the offer, Tractor Co. was trading for $54 a share. Big Wheels Inc. had the investment in Tractor Co. recorded at $1,250,000 on their balance sheet. What would Big Wheels Inc. record on its income statement as a result of this transaction?

a. $278,000 gain

b. $278,000 loss

c. $90,000 loss

d. $90,000 gain

e. No gain or loss is recorded on split-offs.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M92048280

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