Problem
P Company owns 70% of the outstanding stock of S Company. On January 1, 2011, S Company sold land to P Company for $280,000. S had originally purchased the land on March 30, 2007, for $330,000.
P Company plans to construct a building on the land bought from S in which it will house new production machinery. The estimated useful life of the building and the new machinery is 20 years.
To solve: Prepare all journal entries for P and S (from initial purchase of land from 3rd parties to sale between the related parties). In addition, prepare the w/p entry to eliminate the intercompany sale of land