Question

Justings co. owned 80% of evana corp. during 2018, justings sold to evana land with a book value of $48,000. the selling price was $70,000. for purposes of the december 31, 2018 consolidated financial statements, at what amount should the land be reported?

Answer 1

The land should be reported as sold for $70,000. Even though the land is only valued for $48,000 it was still sold for the amount of $70,000. The amount of money paid is much different than the accessed amount. When reporting the transaction it should always be put as the actual sell price, as this will help with future transactions on this land, and all applicable taxes can be paid properly. It is the same thing as buying a vehicle. When purchasing a new car you pay taxes on the amount that the car was bought for, not the Book Value of the vehicle.