A parent sold land costing $400,000 to its subsidiary for $450,000 in 2017. The subsidiary still holds the land at the end of 2019. On a working paper prepared to consolidate the financial statements of the parent and subsidiary in 2019, the eliminating entry connected with this land includes a $50,000 credit to:

a. Land

b. Investment in subsidiary

c. Gain on sale of land

d. Beginning retained earnings of the subsidiary

Question

Business

Oscar Calhoun

12 February, 12:50

A parent sold land costing $400,000 to its subsidiary for $450,000 in 2017. The subsidiary still holds the land at the end of 2019. On a working paper prepared to consolidate the financial statements of the parent and subsidiary in 2019, the eliminating entry connected with this land includes a $50,000 credit to:

a. Land

b. Investment in subsidiary

c. Gain on sale of land

d. Beginning retained earnings of the subsidiary

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Answers (1)

Know the Answer?

Phoenix Lynch · Answer 1

correct option is a. Land

Explanation:

given data

land costing = $400,000

subsidiary 2017 = $450,000

land credit = $50,000

solution

While when we consolidating land that will appear in the group asset at the amount of 450,000.

so here the appreciation in the value of land is not realized gain.

so that there will be credit to land with 50,000

so correct option is a. Land