Final answer:
When consolidating financial statements of a parent and a subsidiary, the elimination entry for land typically debits Investment in Subsidiary and credits the Land account, along with any gain accounts, to reverse the intercompany sale.
Step-by-step explanation:
The student's question relates to the consolidation of financial statements for a parent company and its subsidiary. The specific focus is on the elimination entry associated with land that was recorded in the combined financial statements. When consolidating, any inter-company transactions must be eliminated to avoid overstatement of assets, revenues, or expenses.
Therefore, if the subsidiary sold land to the parent company at a profit, the elimination entry would commonly debit the Investment in Subsidiary account and credit the Land account, as well as any related Realized or Unrealized Gain account, to reverse the intercompany sale and its effects from the consolidated statements.