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. b. Prepare the eliminating entries for the year ended December 31, 20X5 related to the intercompany sales of assets