ABC Corporation purchased land on January 1,2006,for $50,000.On July 15,2008,it sold the land to its subsidiary,XYZ Corporation,for $70,000.ABC owns 80 percent of XYZ's voting shares.
-Based on the preceding information,what will be the workpaper eliminating entry to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 2008?

Question

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The intercompany sale of land results in a gain of $20,000 for ABC Corporation. To eliminate the effects of this transaction, the following entry is made:Debit: Land (XYZ Corporation) $70,000Credit: Land (ABC Corporation) $50,000Credit: Gain on Sale of Land $20,000

ABC Corporation Purchased Land on January 1,2006,for $50,000