Suppose Ryan acquired land sometime in the past at a cost of $2,000,000. During the current year, it sells the land to Patrick (subsidiary) for $2,500,000. Prior to consolidation, a gain of $500,000 (= $2,500,000 - $2,000,000) appears on Ryan's books, and Patrick's books carry the land at $2,500,000. At the date of consolidation, Patrick still owns the land. The necessary eliminating entry made in consolidation for the year of sale is:

Select one:

a. Gain on sale of land................................................ 500,000
Land.................................................................... 500,000

b. Gain on sale of land................................................ 2,000,000
Land.................................................................... 2,000,000

c. Gain on sale of land................................................ 2,500,000
Land.................................................................... 2,500,000

d. No elimination entry is necessary