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19 June, 13:34

Sam Inc. is a 90% owned subsidiary of Paul Corp. Paul sold land to Sam for $100,000 that originally cost Paul $50,000. Paul uses the fully adjusted equity method. What adjustment is needed on Paul's books in the year the land is sold to Sam?

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  1. 19 June, 15:54
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    The answer is given below;

    Explanation:

    The entry at the time of sale was;

    Bank Dr.$100,000

    Land Cr.$50,000

    Gain on Land Cr.$50,000

    At the time of consolidation, elimination the entry will be;

    Retained Earnings/gain on land Dr.$50,000

    Land Cr.$50,000
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