I need some assistance in determining GAAP for recording the sale of some company owned property to a partnership in which the company is a 50% owner.
ABC Company owns land with a book basis of $500,000. We are selling to a new entity, X Development Partners, for $2,000,000. X Development Partners ownership will be ABC Company 50% and Joe Company 50% each contributing $1,000,000. Joe Company pays ABC company $1,000,000 for its half of the land that is put in the partnership. ABC transfers ownership of the land to X Development Partners for its $1,000,000 contribution.
Should ABC Company record the sale at $2,000,000 with cost of $500,000 on its books and record $1,000,000 as an investment in X Development Partners--or --Should ABC Company record the sell as $1,000.000 with a cost of $250,000 and record an investment of $250,000 as an investment in X Development Partners.
ABC Company owns land with a book basis of $500,000. We are selling to a new entity, X Development Partners, for $2,000,000. X Development Partners ownership will be ABC Company 50% and Joe Company 50% each contributing $1,000,000. Joe Company pays ABC company $1,000,000 for its half of the land that is put in the partnership. ABC transfers ownership of the land to X Development Partners for its $1,000,000 contribution.
Should ABC Company record the sale at $2,000,000 with cost of $500,000 on its books and record $1,000,000 as an investment in X Development Partners--or --Should ABC Company record the sell as $1,000.000 with a cost of $250,000 and record an investment of $250,000 as an investment in X Development Partners.