Question
ABC Corporation purchased land on January 1, 20X6, for $50,000. On July 15, 20X8, it sold the land to its subsidiary, XYZ Corporation, for $70,000.
ABC Corporation purchased land on January 1, 20X6, for $50,000. On July 15, 20X8, it sold the land to its subsidiary, XYZ Corporation, for $70,000. ABC owns 80 percent of XYZ's voting shares.
1. Based on the preceding information, what will be the worksheet consolidating entry to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 20X8?
A. | Gain on Sale of Land | 20,000 | |
Land | 20,000 | ||
B. | Gain on Sale of Land | 16,000 | |
Land | 16,000 | ||
C. | Land | 16,000 | |
Gain on Sale of Land | 16,000 | ||
D. | Land | 20,000 | |
Gain on Sale of Land | 20,000 |
2. Based on the preceding information, what will be the worksheet consolidating entry to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 20X9?
A. | Investment in XYZ | 20,000 | |
Land | 20,000 | ||
B. | Land | 16,000 | |
Investment in XYZ | 16,000 | ||
C. | Investment in XYZ | 16,000 | |
Land | 16,000 | ||
D. | Land | 20,000 | |
Investment in XYZ | 20,000 |
3. Which worksheet consolidating entry will be made on December 31, 20X9, if XYZ Corporation had initially purchased the land for $50,000 and then sold it to ABC on July 15, 20X8, for $70,000?
A. | Investment in XYZ | 12,000 | |
NCI in NA of XYZ | 8,000 | ||
Land | 20,000 | ||
B. | Investment in XYZ | 16,000 | |
NCI in NA of XYZ | 4,000 | ||
Land | 20,000 | ||
C. | Land | 20,000 | |
Investment in XYZ | 14,000 | ||
NCI in NA of XYZ | 6,000 | ||
D. | Land | 20,000 | |
Investment in XYZ | 18,000 | ||
NCI in NA of XYZ | 2,000 |
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