On a consolidation worksheet, what adjustment would be made for 2017 regarding the land transfer?
A) Debit gain for $50,000.
B) Credit gain for $50,000.
C) Debit land for $15,000.
D) Credit land for $15,000.
E) Credit gain for $15,000.

Question

Quizplus · Accepted Answer

The adjustment needed for the land transfer would be to credit the land for $15,000. This is because when the parent company transferred land to the subsidiary at a price greater than its book value, the excess amount should be eliminated in consolidation. Therefore, the adjustment would be to reduce the value of land by $15,000, which would be the excess amount paid by the subsidiary.

On a Consolidation Worksheet, What Adjustment Would Be Made for 2017