This is the same problem as Problem 6-14, but assuming the use of the complete equity method.)

On January 1, 2013, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby had capital stock outstanding of $400,000 and retained earnings of $400,000.

The fair value of Selby Company's assets and liabilities is equal to their book value except for the following:

One-half of the inventory was sold in 2013; the remainder was sold in 2014.
At the end of 2013, Perry Company had in its ending inventory $54,000 of merchandise it had purchased from Selby Company during the year. Selby Company sold the merchandise at 20% above cost. During 2014, Perry Company sold merchandise to Selby Company for $300,000 at a markup of 20% of the selling price. At December 31, 2014, Selby still had merchandise that it purchased from Perry Company for $78,000 in its inventory.
Financial data for 2014 are presented here:

Required:
A. Prepare the consolidated statements work-paper for the year ended December 31, 2014?
B. Calculate consolidated retained earnings on December 31, 2014, using the analytical or t-account approach?
C. If you completed Problem 6-14, compare the consolidated balances obtained in requirement A with those obtained in those problems?

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Fair Value Book Value $230,000 800,000 $155,000 600,000 Inventon Plant and Equipment (10-year life) Perry Company $1,385,000 Selby Sales $ 720,000 Equity in Subsidiary Income 153,600 Total Revenue Cost of Goods Sold 1,538,600 720,000 Beginning Inventory 210,000 875,000 1,085,000 400.000 685,000 225,000 910,000 $628,600 155,000 360.000 515,000 225.000 290,000 170,000 460.000 $ 260,000 Cost of Goods Available Less: Ending Inventory Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Company 1/1 Retained Earnings Dividends Declared 12/31 Retained Earnings Accounts Receivable Investment in Selby Company Plant and Equipment (net) Total Assets Accounts Payable Other Current Liabilities 400,000 Retained Earnings Total Liabilities and Equity