Price Corp. owns 80% of the common stock of Stairways to Heaven. Stairways sold an asset with a carrying value of $10,000 to its parent for $15,000 on January 1, 2016. Price intended to use the asset...

Price Corp. owns 80% of the common stock of Stairways to Heaven. Stairways sold an asset with a carrying value of $10,000 to its parent for $15,000 on January 1, 2016. Price intended to use the asset for five years but actually sold it on December 31, 2017, to a third party for $17,000. If no adjustments were made for this intercompany transaction in the consolidating process, identify the amounts (and direction) of balance sheet misstatements at the end of 2017.

a. No misstatements occur.

b. The noncontrolling interest is overstated by $600.

c. The noncontrolling interest is overstated by $2,000.

d. Retained earnings and controlling interest are both overstated by $2,400.