Pizza Factory Company owns $100\%$ controlling interest in its long held subsidiary; The Sugar Company and they use the Equity Method.

Pizza Factor sells inventory to Sugar Company for a $25\%$ Gross Profit.

During $2019$ and $2020,$ intercompany sales amounted to:

Intercompany Sales:

$2019840,000$

$2020930,000$

At the end of $2019,$ Sugar Company had one$-$fifth of the goods purchased that year from Pizza Factory in its ending inventory.

At the end of $2020,$ Sugar Company's $2020$ ending inventory contained one$-$fourth of that year$$s purchases from Pizza Factory.

There were no intercompany sales prior to $2019.$

Prepare in general journal form all entries necessary on the consolidated statements workpapers to eliminate the effects of the intercompany sales for $2020.$

Problem $2$b

Assume a parent company owns a $100\%$ controlling interest in its subsidiary.

On January $1,2022,$ the Parent company sold fixed assets to it's subsidiary for $$900,000$ with an estimated remaining useful life of $5$ years.

The Parent Company had on their books, at the date of sale, the following for these fixed assets:

Original Cost $1,250,000$

Accumulated Depreciation $375,000$

Net Carrying Value $875,000$

Prepare the consolidating workpaper journal entries, relating to THE SALE OF THE EQUIPMENT, necessary in $2022.$