ANSWER IN YOU OWN WORDS!

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1. Explain the process by which assets are written up (or down) on intercompany asset transfers and why GAAP prohibits the recognition of profit in the intercompany transfers of assets.

7. What is the purpose of the following entry that is made each period subsequent to an intercompany sale of land until the period in which the land is resold outside of the consolidated group?

[I_gain] Equity investment .............................................. xxx

Land......................................................................................... xxx