1. Please use the Equity Method for Prime to account for its acquisition of Second Company. 2. Use the data for the Prime Company acquisition of the Second Company to prepare the consolidation worksheet entries for the December 31, year one, worksheet. 3. Use the data for the Prime Company acquisition of the Second Company to prepare the consolidation worksheet entries for the December 31, year two, worksheet

Prime Company acquired 100.00% of the common stock of Second Company on January 1, year one, for $600,000 On that date, Second had the following trial balance debit account Additional paid in capital Building (12-year life) 250,000 Common stock Current assets Equipment (6-yr life) Land Liabilities (due in 4 years) Retained eamings 1/year 1 credit 100,000 170,000 170,000 160,000 110,000 300,000 120,000 Totals 690,000 690,000 $60,000 $30,000 During year one, Second reported net income of During year one, Second paid dividends of $80,000 $40,000 During year two, Second reported net income of During year two, Second paid dividends of On January 1, year one, fair values were Land Building Equipment $146,000 $286,000 $184,000 There was no impairment of any goodwill arising from the acquisition