Assets Pert Corporation acquired 80 percent of the Smart Company ten years ago. In the intervening years, Pert and Smart made several intercompany transfers of depreciable assets. Pert's controller is beginning to prepare consolidated financial statements for the current year ended December 31,2012. As the new assistant controller, you are asked to develop the working paper eliminations for the following group of intercompany transactions. Pert uses the equity method to account for its investment in Smart. All depreciation is straight-line.

Required
a. Prepare the necessary working paper eliminations related to the above intercompany transactions at December 31,2012.
b. Assume that the item in transaction 2 was sold externally on January 1, 2012, for $400,000. Prepare the working paper eliminations needed for transaction 2 at December 31,2012, reflecting the sale to the outside party during 2012.

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Transaction Original Accumulated Transfer Remaining Upstream (U) No.Date Cost Depreciation Price Life Downstream (D) 2. 3. 6/30/06 $100,000 20,000 1/2/08 450,000 300,000 1/1/11 600,000 360,000 $160,000 200,000 200,000 8 years 10 years 5 years