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Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2020, for $75,000. The land originally cost Leo $60,000.
Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2020, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2020 and 2021, respectively. Leo uses the equity method to account for its investment. On a consolidation worksheet, what adjustment would be made for 2020 regarding the land transfer?
| A. Debit gain for $50,000. | ||
| B. Credit gain for $50,000. | ||
| C. Debit land for $15,000. | ||
| D. Credit land for $15,000. |
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