Diamond Company owns 80 percent of Emerald and Emerald owns 90 percent of Sapphire, Inc. Separate operating

Question:

Diamond Company owns 80 percent of Emerald and Emerald owns 90 percent of Sapphire, Inc. Separate operating income totals for the current year follow; they contain no investment income. None of these acquisitions required amortization expense. Included in Sapphire’s income is a $50,000 intra entity gain on transfers to Emerald still in Emerald’s possession.