1. On January 1, 2021, Parent company sold to Subsidiary company for $47,000 a parcel of land that had cost the Parent $50,000. On March 2, 2025, Subsidiary company sold the land to an outside company for $54,000. Working paper eliminating entries for the year ended December 31, 2023 would include

a. a credit of $3,000 to Land.

b. a credit of $3,000 to Retained Earnings.

c. a debit of $7,000 to Land.

d. a credit of $3,000 to Investment in Subsidiary.

2. On January 1, 2021, a 70%-owned Subsidiary company sold to its Parent company for $183,000 a parcel of land that had cost the Subsidiary $172,000. On March 2, 2023, Parent company sold the land to an outside company for $200,000. How are Parents 2023 equity in net income of Subsidiary and 2023 noncontrolling interest in net income affected by the intercompany sale of land?

Equity in net income Noncontrolling interest in net income

a. $11,000 increase $0

b. $7,700 decrease $3,300 decrease

c. $7,700 increase $3,300 increase

d. $11,000 decrease $0

Pen Corporation owned equipment with an original cost of $84,000. On January 1, 2021, Pen sold the equipment to Sen Company (a 90%-owned subsidiary) for a price of $75,600. At the time of the intercompany sale, the equipment had been depreciated for $17,500. The equipment has a remaining useful life of 7 years and is straight-line depreciated. On January 1, 2023, Sen sold the equipment to an outside company for $61,200.

(i) Prepare the working paper eliminating entries I-1, I-2 and I-3 regarding the equipment for the year ended December 31, 2021.

(ii) Prepare the working paper eliminating entry I-1 regarding the equipment for the year ended December 31, 2022.

(iii) Prepare the working paper eliminating entry regarding the equipment for the year ended December 31, 2023.