Downstream Intercompany Equipment Transactions On July 1, 2015, Pearl Industries sold administrative equipment with a book value of $720,000 to its subsidiary, Shiek Shoes, for $840,000. 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. Consolidation Journal Description Investment in Shiek Equipment, net To eliminate unconfirmed gain on intercompany transfer of equipment. Equipment, net Depreciation expense To eliminate excess depreciation expense. Debit Credit 84,000 0 0 84,000 12,000 x 0 0 12,000 x (b) It is now December 31, 2018. Prepare the required eliminating entries for this intercompany equipment transaction for the December 31, 2018, consolidation workin paper (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. Consolidation Journal Description Debit Credit Investment in Shiek Equipment, net 70,000 x 0 0 70,000 x To eliminate unconfirmed gain on intercompany transfer of equipment. Equipment, net 0 * 12,000 x Depreciation expense 0 12,000 x To eliminate excess depreciation expense. (c) Now assume that Shiek sells the equipment to an outside party for $600,000 on January 1, 2019. What is the consolidated gain on the sale of equipment? $ 0 What is the gain reported by Shiek? $ 0 x Prepare the required eliminating entries for the December 31, 2019, consolidation working paper. Consolidation Journal Description Debit Credit Investment in Shiek 18,000 x 0 Gain on sale of equipment + 0 18,000 x