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 2009?

Question

Quizplus · Accepted Answer

The eliminating entry will debit Land for $50,000 and credit Investment in XYZ Corporation for $50,000. This will remove the effects of the intercompany sale of land from the consolidated financial statements.

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