Putnam Company owns 80 percent of Swaraj Company. The excess of acquisition cost over book value was attributed entirely to previously unrecorded identifiable intangibles. For 2014, Swaraj Company reported net income of $7,000,000 and paid dividends of $2,000,000. Appropriate amortization of the previously unrecorded identifiable intangibles for 2014 is $1,750,000. The following information is available regarding intercompany transactions:
1. During 2014, Swaraj sold land to Putnam at a loss of $300,000.
2. Putnam's ending inventory at December 31, 2014, included merchandise acquired from Swaraj; the unconfirmed profit on this inventory was $600,000.
3. Putnam's ending inventory at December 31, 2013, included merchandise acquired from Swaraj; the unconfirmed profit was $350,000.
4. On January 3,2011, Putnam sold equipment to Swaraj at a gain of $1,000,000; at the time of sale, the remaining life of this equipment was 10 years, straight-line.
Required
a. Calculate Putnam Company's equity method income accrual for 2014 and the noncontrolling interest in net income for 2014.
b. Prepare the working paper eliminations made in consolidation at December 31, 2014, related to the intercompany transactions.