Problem 3-6 (LO 2) Equity method, 80% interest, worksheet, statements. Scully Company prepared the following balance sheet on January 1, 20X1:

Assets Liabilities and Equity Current assets . . . . . . . . . . . . . $ 50,000 Liabilities . . . . . . . . . . . . . . . . $140,000 Land . . . . . . . . . . . . . . . . . . . 75,000 Common stock ($10 par) . . . . . . 100,000 Buildings . . . . . . . . . . . . . . . . 350,000 Paid-in capital in excess of par . . 120,000 Accumulated depreciation . . . . . Retained earnings (deficit) . . . . . (25,000)

—Buildings . . . . . . . . . . . . . (140,000)

Total assets . . . . . . . . . . . . . $ 335,000 Total liabilities and equity . . . . $335,000 On this date, Prescott Company purchased 8,000 shares of Scully Company’s outstanding stock for a total price of $270,000. Also on this date, the buildings were understated by $40,000 and had a 10-year remaining life. Any remaining discrepancy between the price paid and book value was attributed to goodwill. Since the purchase, Prescott Company has used the simple equity method to record the investment and its related income.

Prescott Company and Scully Company have prepared the following separate trial balances on December 31, 20X2: