Brown Corporation holds 70 percent of the voting common stock of Transom Company. On January 1, 20X2. Transom paid \(\$ 300,000\) to acquire a building with an expected economic life of 15 years. Transom uses straight-line depreciation for all depreciable assets. On December 31, 20X7, Brown purchased the building from Transom for \(\$ 144,000\). Brown reported income, excluding investment income from Transom, of \(\$ 125.000\) and \(\$ 150,000\) for 20X7 and 20X8, respectively. Transom reported net income of \(\$ 15,000\) and \(\$ 40,000\) for \(20 \times 7\) and 20X8, respectively.

\section*{Required}

a. Give the appropriate eliminating entry or entries needed to eliminate the effects of the intercompany sale of the building in preparing consolidated financial statements for \(20 \times 7\).

b. Compute the amount to be reported as consolidated net income for Brown Corporation for \(20 \times 7\).

c. Give the appropriate eliminating entry or entries needed to eliminate the effects of the intercompany sale of the building in preparing consolidated financial statements for 20X8 .

d. Compute the amount to be reported as consolidated net income for Brown Corporation for \(20 \times 8\).