Final answer:
The sale of land with unrealized profit requires an adjustment in the financial statements, impacting the balance sheet, income statement, and cash flow statement.
Step-by-step explanation:
When a farmer decides to sell their land, whether it's in the current year or a prior year, with unrealized profit, this transaction would require an adjustment in the financial statements. This is because the sale of an asset and the associated gain or loss has an impact on the balance sheet and the income statement. The balance sheet is altered as the land is removed from the assets section and the cash or receivable from the sale is added. The income statement is influenced by the recognition of the profit or loss from the sale. Furthermore, it also changes the cash flow statement, as the receipt of cash from selling the land is a part of investing activities.