Downstream Intercompany Land Transactions

Saucony Company, a wholly-owned subsidiary of Puma Company, purchased a tract of land from Puma in 2019 for $5,000,000. Puma originally acquired the land for $2,000,000 and accounts for its investment in Saucony using the complete equity method.

Required

a. Assuming that Saucony still owns the land, give the working paper eliminations needed for the intercompany land sale when consolidated statements are prepared at the end of 2019 and 2020.

Enter numerical answers using all zeros (do not abbreviate to millions or thousands).

Date	Description		Debit	Credit
2019	AnswerGain on sale of landInvestment in SauconyLandLoss on sale of landRetained earnings, beg. - Saucony		Answer	Answer
	AnswerGain on sale of landInvestment in SauconyLandLoss on sale of landRetained earnings, beg. - Saucony		Answer	Answer
2020	AnswerGain on sale of landInvestment in SauconyLandLoss on sale of landRetained earnings, beg. - Saucony		Answer	Answer
	AnswerGain on sale of landInvestment in SauconyLandLoss on sale of landRetained earnings, beg. - Saucony		Answer	Answer

b. If Saucony sells the land to a third party for $4,500,000 in 2021, prepare the eliminations needed for the intercompany land sale when consolidated statements are prepared at the end of 2021.

Date	Description		Debit	Credit
2021	AnswerGain on sale of landInvestment in SauconyLandLoss on sale of landRetained earnings, beg. - Saucony		Answer	Answer
	AnswerGain on sale of landInvestment in SauconyLandLoss on sale of landRetained earnings, beg. - Saucony		Answer	Answer