Company A, a large company that contracts with the military, allowed Company B, a small non profit research firm, to build a lab building on their (company A's) land. Company A spent $50,000 to improve the land so that building could occur. Company B paid for the materials and all of the construction of this building which totalled $250,000. No contract was created before or after construction. Company A believed that the building was a gift from Company B and Company B believed the land was a gift from Company A. Both companies were planning on recording the building and the land as assets on their financial statements. Should Company A record the land and the money spend getting the land prepared for construction as a loss contingency or record them both as an asset? The land is valued at $80,000. When the Companies discovered the issue at hand they each hired a team of lawyers to help get to the bottom of things. The construction was finished in 2020 but the issue at hand was not noticed until January 10th, before financial statements had been finalized.

If Company A recognizes a loss, how much should the recognize?

What would the journal entry or entries be to record the loss?

Should the loss be recognized in 2020 or 2021?