Entries—Intercompany Sale of Land
Procter Company owns 90% of the outstanding stock of Silex Company. On January 1, 2011, Silex Company sold land to Procter Company for $350,000. Silex had originally purchased the land on June 30, 2007, for $200,000.
Procter Company plans to construct a building on the land bought from Silex in which it will house new production machinery. The estimated useful life of the building and the new machinery is 15 years.
Required:
- Prepare the entries on the books of Procter related to the intercompany sale of land for the years ended December 31, 2011, and December 31, 2012.
- Prepare in general journal form the workpaper entries necessary because of the intercompany sale of land in:
(1) The consolidated financial statements workpaper for the year ended December 31, 2011.
(2) The consolidated financial statements workpaper for the year ended December 31, 2012.