Question
Company A owns all of the outstanding stock of Company B and accounts for its investment under the initial value method. At the beginning of
Company A owns all of the outstanding stock of Company B and accounts for its investment under the initial value method. At the beginning of 2020 Company B sold a piece of land to Company A for $50,000. Company B had purchased the land in 2010 for $30,000. What worksheet entry is needed in 2020 connected with this land sale from Company B to Company A?
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a DEBIT: land $20,000. CREDIT: gain on sale $20,000.
b DEBIT: gain on sale $20,000. CREDIT: land $20,000.
c DEBIT: gain on sale 20000. CREDIT: sales $20,000.
d No worksheet entry is needed.
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