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Working papers to eliminate the full amount of the gain on the sale and reduce the land account to its cost to the consolidated entity.ġ This entry is the same for downstream and upstream intercompany landĢ The parent company reduces its investment income and investment accountī While the land is held within the consolidated entity in years subsequent to the year of

 Eliminated from consolidated financial statements through working paperĭOWNSTREAM INTERCOMPANY SALE OF LAND (Illustration 6-1)Ī In the year of an intercompany sale of land, an entry is made in the consolidation  Eliminated from investment income in a one-line consolidation (use of equity  The asset is fully depreciated through use within the consolidated entity.ĭ The effects of unrealized gains and losses are:

 The plant asset is sold to an outside entity, or SALE OF PLANT ASSETS TO AFFILIATED COMPANIESĪ The sale of plant assets to affiliated companies at a price other than book value creates an unrealized gain or loss to the consolidated entity.ī Gain or loss from the intercompany sale appears in the income statement of the selling affiliate in the year of sale.Ĭ The gain or loss is unrealized from the viewpoint of the consolidated entity until: INTERCOMPANY PROFIT TRANSACTIONS - PLANT ASSETS