The following information relates to land sales between a parent and its subsidiary.
•In 2018, the subsidiary sold land to its parent at a loss of $3,000. In 2020, the parent sold the land to an outside company at a gain of $5,000.
•In 2018, the subsidiary sold land at a gain of $10,000 to the parent. The parent sold the land at a loss of $2,000 in 2019.
•In 2019, the parent sold land to its subsidiary at a gain of $7,000. The subsidiary still holds the land at the end of 2020.
•In 2020, the parent sold land with a book value of $12,000 to the subsidiary for $4,000. The subsidiary still holds the land at the end of 2020.
Required
Prepare the eliminating entries (I) for the 2020 consolidation working paper for the above intercompany transactions.

Question

Quizplus · Accepted Answer

The Answer of The following information relates to land sales between a parent and its subsidiary.
•In 2018, the subsidiary sold land to its parent at a loss of $3,000. In 2020, the parent sold the land to an outside company at a gain of $5,000.
•In 2018, the subsidiary sold land at a gain of $10,000 to the parent. The parent sold the land at a loss of $2,000 in 2019.
•In 2019, the parent sold land to its subsidiary at a gain of $7,000. The subsidiary still holds the land at the end of 2020.
•In 2020, the parent sold land with a book value of $12,000 to the subsidiary for $4,000. The subsidiary still holds the land at the end of 2020.
Required
Prepare the eliminating entries (I) for the 2020 consolidation working paper for the above intercompany transactions.

The Following Information Relates to Land Sales Between a Parent