On January 1, 20X1, Purple Corporation purchased 70% of the common stock of Stew Corporation by issuing common stock with a fair value of $190,000. At that date, Stew reported retained earnings of $100,000 and accumulated depreciation of $22,000. The book values and fair values of Stew's net assets were the same on the date of business combination except for buildings and equipment with a fair value of $35,000 greater than book value and a 20- year remaining life. Additional information:

1. Purple Corporation sold a building to Stew for $75,000 on December 31, 20X3. The building was purchased by Purple for $135,000 and depreciated on a straight-line basis over 25 years. At the time of sale, Purple reported accumulated depreciation of $65,000 and remaining life of 10 years.

2. On July 1, 20X2, Stew sold land that it had purchased for $32,000 to Purple for $45,000. Purple is planning to build a new warehouse on the property prior to the end of 20X5.

INSTRUCTIONS: a. Prepare the eliminating entries for the year ended December 31, 20X3 related to the intercompany sales of assets.