(Answered) Question - lenard corp completely liquidates its 80-owned

Accounting

Question - Lenard Corp. completely liquidates its 80%-owned subsidiary, Lenita Corp. The liquidation results in a distribution to Lenard of property with a fair market value of $1,000,000 and an adjusted basis to Lenita of $400,000. How much gain will Lenard and Lenita each recognize on the transaction?

Lenard, $0; Lenita, $0

Lenard, $0; Lenita, $600,000

Lenard, $400,000; Lenita, $160,000

Lenard, $600,000; Lenita, $120,000

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