Answered step by step
Verified Expert Solution
Question
1 Approved Answer
which one is correct? Jones Corporation owns 100% of Smith Corporation. On July 1, Year 1, Jones Corporation sold land to Smith Corporation for $400,000.
which one is correct?
Jones Corporation owns 100% of Smith Corporation. On July 1, Year 1, Jones Corporation sold land to Smith Corporation for $400,000. The initial cost of the land to Smith was $330,000. On December 31, Year 1, Smith sold the land to IBM Corporation for $425,000. Jones does not own any portion of IBM Corporation. How should Jones account for the gain on sale of land for the two land sales transactions in its consolidated working papers and general ledger? Recognize the $70,000 intercompany gain on sale of land on July 1, Year 1 to Jones. Recognize a gain on sale of $25,000 for the sale of land to IBM on December 31, Year 1. Record no entry for the intercompany land sale on July 1, Year 1 to Jones. Recognize a gain on sale of $ 95,000 for the sale of land to IBM on December 31, Year 1. Eliminate the $70,000 intercompany gain on sale of land on July 1, Year 1 to Jones. Eliminate the $25,000 gain on the sale of land to IBM on December 31, Year 1. Eliminate the $70,000 intercompany gain on sale of land on July 1, Year 1 to Jones. Recognize a gain on sale of $95,000 for the sale of land to IBM on December 31, Year 1Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started