QUESTION 2
S Ltd acquired land from its parent company P Ltd for $1 000 000. The land had originally cost P Ltd $100 000 (assume a tax rate of 30%). Two years later S sold the land outside the group for $1 200
000, the consolidation journal entry required would be (ignoring tax effects):
a. Dr. Opening Retained Earnings
Cr. Gain on Sale
b. no entry required
c. Dr. Opening Retained Earnings
Cr. Gain on Sale
d. Dr. Opening Retained Earnings
Cr. Gain on Sale
$200 000
$200 000
$1 100 000
$1 100 000
$900 000
$900,000