Assume that during 2015 a wholly owned subsidiary sells land that originally cost $360,000 to its parent for a sale price of $400,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping.

a. Prepare the required [I] consolidation entry in 2015.

Description		Debit	Credit
[lgain]		Answer	Answer
		Answer	Answer

b. Prepare the required [I] consolidation entry required at the end of each year 2016 through 2018.

Description		Debit	Credit
[lgain]		Answer	Answer
		Answer	Answer

c. Assume that the parent re-sells the land outside of the consolidated group for $420,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required [I] consolidation entry for 2019.

Description		Debit	Credit
		Answer	Answer
		Answer	Answer
	Land	Answer	Answer
[lgain]		Answer	Answer
		Answer	Answer

d. What will be the amount of gain reported in the consolidated income statement in 2019?

Preparing the [l] consolidation entries for sale of land Assume that during 2015 a wholly owned subsidiary sells land that originally cost $360,000 to its parent for a sale price of $400,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping. a. Prepare the required [l] consolidation entry in 2015. Description Debit Credit [lgain) Accounts receivable * 400,000 x Land 0 3,600,000 X b. Prepare the required [l] consolidation entry required at the end of each year 2016 through 2018. Description Debit Credit [lgain] Land * 1,080,000 x 0 APIC 0 1,080,000 x Support C. Assume that the parent re-sells the land outside of the consolidated group for $420,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required [l] consolidation entry for 2019. Description Debit Credit Accounts receivable * 420,000 Loss on sale 0 60,000 x Land O 360,000 x [lgain] Land * * 360,000 x 0 APIC 0 360,000 x d. What will be the amount of gain reported in the consolidated income statement in 2019? $ 360,000