SELECT THE BEST ANSWER (Shows references and computations are required) 1. At January 1, 2020, Ponce, Inc. sells land to its 80%-owned subsidiary, Salinas Corporation, at a $20,000 gain. The land still held by Salinas on December 31, 2023. What is the effect of the intercompany sale of land on 2023 consolidated net income? a. Consolidated net income will be the same as it would have been had the sale not occurred. b. Consolidated net income will be $20,000 less than it would have been had the sale not occurred. c. Consolidated net income will be $16,000 less than it would have been had the sale not occurred. d. Consolidated net income will be $20.000 greater than it would have been had the sale not occurred. 2. Patillas Company owns a 100% interest in the common stock of the Sabana Company. On January 1, 2020, Patillas sold Sabana a fixed asset that Sabana will use over a 5-year period. The asset sold at a $5,000 profit. In the consolidated statements, this profit will a. not be recorded. b. be recognized over 5 years. c. be recognized in the year of sale. d. be recognized when the asset is resold to outside parties at the end of its period of use. Use the following information to answer question 3 and 4 In 2020, Pear Corporation sold land to its subsidiary, Soda Corporation, for $38,000. It had a book value of $24,000. In 2023, Soda sold the land for $41,000 to an unaffiliated firm. 3. Which of the following is correct? A. No consolidation journal entry is required for this transaction in 2020. B. A consolidation journal entry is required only if the subsidiary was less than 100% owned in 2020. C. A consolidation journal entry is required each year that Soda has the land. D. A consolidated working paper entry was required only if the land was held for resale in 2020. 4. The 2020 unrealized gain from the intercompany sale A. should recognized in consolidation in 2020 by a working paper entry. B. should eliminated from consolidated net income by a working paper entry that credits land for $14,000. C. should eliminated from consolidated net income by a working paper entry that debits land for $14,000 D. should eliminated from consolidated net income by a working paper entry that credits gain on sale of land for $14,000