Question

Johnson sold land to its 100% owned subsidiary in Year 1. The land had a book...

Johnson sold land to its 100% owned subsidiary in Year 1. The land had a book value of $75,000 and was sold for $110,000.

Required:  

1.      Prepare the consolidation entries for Year 1.

2.      Prepare the consolidation entries for Year 2.

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Johnson Amount $ Elimination entry
Sale value of land 110,000.00 Year Nature Account Debit $ Credit $
Less: Carrying value of land     75,000.00 Year 1 To eliminate sale Proceeds on sale 110,000.00
Gain on sale     35,000.00 Land 75,000.00
Gain on sale of land 35,000.00
Year 2 To eliminate gain on sale Retained Earnings     35,000.00
Land 35,000.00
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