Downstream Intercompany Equipment Transactions

On July $1,2015,$ Pearl Industries sold administrative equipment with a book value of $$900,000$ to its subsidiary, Shiek

Shoes, for $$1,050,000.$ At the date of sale, the equipment had a remaining life of five years. It is being straight$-$line

depreciated on Shiek's books. It is now December $31,2017,$ the end of the accounting year, and you are preparing the

working paper to consolidate the trial balances of Pearl and Shiek. Shiek still owns the equipment.

Required

$($a$)$ Prepare the necessary consolidation eliminating entries at December $31,2017.$

$($b$)$ It is now December $31,2018.$ Prepare the required eliminating entries for this intercompany equipment transaction

for the December $31,2018,$ consolidation working paper.

$($c$)$ Now assume that Shiek sells the equipment to an outside party for $$750,000$ on January $1,2019.$

What is the consolidated gain on the sale of equipment? $

What is the gain reported by Shiek? $

Prepare the required eliminating entries for the December $31,2019,$ consolidation working paper.