Create Two Inner Classes To ObjectFactory Class

I'm trying to get to grips with the AndEngine, so I've recently gotten hold of their Cookbook, but there's a section that's confusing. I'm using the Eclipse IDE with the section is asking that I create two inner classes to an ObjectFactory class. I'm not sure if what it wants me to do is doable in java or specifically in Eclipse. This is the section of code the book is asking me to create.

Java Code:

package com.example.helloworld;

public class ObjectFactory {
public static LargeObject createLargeObject(final int pX, final in pY){
return new LargeObject(pX,pY);
}
public static SmallObject createLargeObject(final int pX, final in pY){
return new SmallObject(pX,pY);
}
} mh_sh_highlight_all('java');

Now this is returning errors that I should declare these two as individual classes, but I feel like I am missing something. Earlier the book asks you to create this BaseObject class.

Java Code:

package com.example.helloworld;

public class BaseObject {
@SuppressWarnings("unused")
private int mX;
@SuppressWarnings("unused")
private int mY;

[code]...

It then mentions that the two classes LargeObject and SmallObject are inner classes of BaseObject and extends this class. The ObjectFactory class is meant to determine which subtype of the base class that needs, as well as define the objects properties.