Workpaper Entries and Gain on Sale of Land Padilla Company purchased 80% of the common stock of Sanoma Company in the open market on January 1, 2003, paying $31,000 more than the book value of the interest acquired. The difference between cost and book value is attributable to land. LO2 Required:
A. What workpaper entry is required each year until the land is disposed of?
B. Assume that the land is sold on 1/1/06 and that Sanoma Company recognizes a $50,000 gain on its books. What amount of gain will be reflected in combined income on the 2006 consolidated income statement?
C. In all years subsequent to the disposal of the land, what workpaper entry will be necessary?