Parry Corporation acquired a 100% interest in Sent Company on January 1, 2016, paying $140,000. Financial statement data for the two companies for the year ended December 31, 2016 follow:

Required:

A. What method is being used by Parry to account for its investment in Sent Company? How can you tell?

B. Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2016. Any difference between the book value of equity acquired and the value implied by the purchase price relates to subsidiary land.

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Income Statement Parry Sent Sales $476,000 285,600 $154,500 121,000 29,500 Cost of goods sold Other expense Dividend income 45,500 3,500 Retained Earnings Statement 19,500 4,000 3,500 Balance, 1/1 76,000 Net income 148,400 17,500 Dividends declared Balance Sheet 84,400 Cash 29,000 Accounts receivable 76,000 49,500 56,500 36,500 Inventory Investment in Sent Company Land 140,000 4,000 27,000 120,000 206,900 -0- 12,000 Accounts payable 14,000 Common stock 100,000 Retained earnings 20,000