Exam 7: Elimination of Unrealized Gains or Losses on Intercompany Sales of Property and Equipment

In the year a subsidiary sells land to its parent company at a gain, a workpaper entry is made debiting 1)Retained Earnings - P Company. 2)Retained Earnings - S Company. 3)Gain on Sale of Land.

P Company purchased land from its 80% owned subsidiary at a cost of $100,000 greater than it subsidiary's book value.Two years later P sold the land to an outside entity for $50,000 more than it's cost.In its current year consolidated income statement P and its subsidiary should report a gain on the sale of land of: