Sunnyvale Company, a wholly-owned subsidiary of Pickford Company, purchased a tract of land from Pickford in 2012 for $200,000. Pickford originally acquired the land for $50,000 and accounts for its investment in Sunnyvale using the complete equity method.
Required
a. Assuming that Sunnyvale still owns the land, give the working paper eliminations needed for the intercompany land sale when consolidated statements are prepared at the end of 2012 and 2013.
b. If Sunnyvale sells the land to a third party for $240,000 in 2014, prepare the eliminations needed for the intercompany land sale when consolidated statements are prepared at the end of 2014.