Seacock Ltd Is a Wholly Owned Subsidiary of Peacock Ltd

Seacock Ltd is a wholly owned subsidiary of Peacock Ltd.During 2015 Seacock sold merchandise that cost them $1,500,000 to Peacock for $2,000,000.At the year-end Peacock had not sold or paid for this merchandise.
Required:
A) Why is it necessary to eliminate intercompany transactions in the preparation of consolidated financial statements?
B) Identify all the effects on Peacock's consolidated financial statements if the intercompany transactions were not eliminated in the preparation of the consolidated financial statements.