QUESTION

P Company owns 80% of the outstanding stock of S Company. On January 1, 2011, S Company sold land to P Company for $400,000. S had originally purchased the land on June 30, 2007, for $150,000.

P Company plans to construct a building on the land bought from S in which it will house new production machinery. The estimated useful life of the building and the new machinery is 20 years.

To solve: Prepare the w/p entry to eliminate the intercompany sale of land