On January 1, 2021, Polka Company purchased 100% of Song Company for $500,000 which was above book value. In completing the purchase differential analytics, the company determined that $40,000 of the excess over book was attributable to land on Song's books and records. During 2021, Song sold the land for $150,000 ($60,000 cost on Song's books and records) and recorded the following transaction on its books and records: Debit Credit Cash Land Gain on sale of land 150,000 Income from Song Investment in Song Accordingly, Polka made the following entry on its books and records when the land was sold by Song: Credit Debit 60,000 90,000 40,000 40,000 In completing the consolidated for the year ended December 31, 2021, what elimination entry is recorded to ensure the gain is recorded at the correct amount in its functional income statement category?

On January 1, 2021, Polka Company purchased 100% of Song Company for $500,000 which was above book value. In completing the purchase differential analytics, the company determined that $40,000 of the excess over book was attributable to land on Song's books and records. During 2021, Song sold the land for $150,000 ($60,000 cost on Song's books and records) and recorded the following transaction on its books and records: Debit Credit Cash Land Gain on sale of land 150,000 Income from Song Investment in Song Accordingly, Polka made the following entry on its books and records when the land was sold by Song: Credit Debit 60,000 90,000 40,000 40,000 In completing the consolidated for the year ended December 31, 2021, what elimination entry is recorded to ensure the gain is recorded at the correct amount in its functional income statement category?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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