Problem 3A-1 (LO 2, 8) Equity method adjustments, vertical consolidated worksheet. (Same as Problem 3-2 except vertical format worksheet 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:

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.
1. Using this information or the information in the following statements, prepare a determination and distribution of excess schedule.
2. Peres Company carries the Investment in Soll Company under the simple equity method. In general journal form, record the entries that would be made to apply the equity method in 20X1 and 20X2.
3. Complete the vertical worksheet for consolidated financial statements for 20X2