On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company's stockholders' equity consisted of the following:

Common stock..............................$500,000

Retained earnings............................190,000

An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition:

Additional Information-Date of Acquisition
Stevens Company's equipment had an original life of 15 years and a remaining useful life of 10 years. All the inventory was sold in 2014. Stevens Company purchased its bonds payable on the open market on January 10, 2014, for $150,000 and recognized a gain of $55,556.
Financial statement data for 2016 are presented here:

Required:
A. What method is Palmer using to account for its investment in Stevens? How can you tell?
B. Prepare in general journal form the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price in the December 31, 2014, consolidated statements workpaper.
C. Prepare a consolidated financial statements workpaper for the year ended December 31, 2016.
D. Prepare in good form a schedule or t-account showing the calculation of the controlling and noncontrolling interest in consolidated net income for the year ended December 31, 2016.

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Book Value $ 90,726 200,000 160,000 300,000 (100,000) 190,000 (205,556) 54,830 Fair Value $90,726 Cash Accounts receivable Inventories Equipment Accumulated depreciation-equipment Land Bonds payable Other 210,000 390,000 (130,000) 290,000 (150,000) 54,830 $955,556 Total Company Sales Gross margin Depreciation expense Other expenses Income from operations ncome 1/1 Retained earnings 12/31 Retained earnings $220,000 Accounts receivable Investment in Stevens Company Equipment Accumulated depreciation-equipment Land 450,000 (300,000) 360,000 300,000 (140,000) 290,000 $855,000 Total assets Accounts payable Bonds payable Common stock Retained earnings $2,032,600 323.500135000 400,000 1,000,000 309,100 $2,032,600 500,000 220,000 $855.000 Total liabilities and equity