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Sam Inc. is a 90% owned subsidiary of Paul Corp. Paul sold land to Sam for $100,000 that originally cost Paul $50,000. Paul uses the fully adjusted equity method. What adjustment is needed on Paul's books
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Sam Inc. is a 90% owned subsidiary of Paul Corp. Paul sold land to Sam for $100,000 that originally cost Paul $50,000. Paul uses the fully adjusted equity method. What adjustment is needed on Paul's books in the year the land is sold to Sam?

User Dshkol
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4 votes

Answer:

The answer is given below;

Step-by-step explanation:

The entry at the time of sale was;

Bank Dr.$100,000

Land Cr.$50,000

Gain on Land Cr.$50,000

At the time of consolidation, elimination the entry will be;

Retained Earnings/gain on land Dr.$50,000

Land Cr.$50,000

User Cizixs
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