French Company Sells Its Subsidiary, Spanish Company, to Italian, Inc

Multiple Choice

French Company sells its subsidiary, Spanish Company, to Italian, Inc.French has net assets of $50 million and Spanish has net assets of $5 million.The sales price is $2 million down and a 10% note for $4 million.Italian has the right to cancel over the next year and uses the deposit method.The proper accounting for this transaction by French Company is

A)
$\begin{array} { l c } \text { Cash } & 2,000,000 \\\text { Notes Receivable } & 4,000,000 \\\text { Spanish } & 5,000,000 \\\text { Gain } & 1,000,000\end{array}$
B)
Cash $\quad2,000,000$
Deposit from Purchaser $\quad2,000,000$

C)
$\begin{array} { l c } \text { Cash } & 2,000,000 \\\text { Notes Receivable } & 4,000,000 \\\text { Spanish } & 5,000,000 \\\text { Deposit from Purchaser } & 1,000,000\end{array}$
D)
$\begin{array} { l c } \text { Cash } & 2,000,000 \\\text { Notes Receivable } & 4,000,000 \\\text { Spanish } & 5,000,000 \\\text { Deferred Gain } & 1,000,000\end{array}$