Problem 3-3 (LO 4) Sophisticated equity method adjustments, consolidated worksheet. (This is the same as Problem 3-2, except the sophisticated equity method is used.) On January 1, 20X1, Peres Company purchased 80% of the common stock of Soll Company for $308,000.

On this date, Soll had common stock, other paid-in capital, and retained earnings of $50,000,

$100,000, and $150,000, respectively. Net income and dividends for two years for Soll Company were as follows:

20X1 20X2 Net income . . . . . . . . . . . . $60,000 $90,000 Dividends . . . . . . . . . . . . . . 20,000 30,000 On January 1, 20X1, the only tangible assets of Soll that were undervalued were inventory and the building. Inventory, for which FIFO is used, was worth $10,000 more than cost. The inventory was sold in 20X1. The building, which is worth $25,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributable to goodwill.