On January 1, 2009, Plank Company purchased 80% of the outstanding capital stock of Scoba Company for $53,000. At that time, Scoba’s stockholders’ equity consisted of capital stock, $55,000; other contributed capital, $5,000; and retained earnings, $4,000. On December 31, 2013, the two companies’ trial balances were as follows:

The accounts payable of Scoba Company include $3,000 payable to Plank Company.

Required:
A. What method is being used by Plank to account for its investment in Scoba Company?
How can you tell?
B. Prepare a consolidated statements workpaper at December 31, 2013. Any difference between book value and the value implied by the purchase price relates to subsidiaryland.

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Plank Cash Accounts Receivable Inventory Investment in Scoba Company Land Dividends Declared Cost of Goods Sold Other Expense 42,000 21,000 15,000 61,000 52,000 10,000 85,400 10,000 $296,400 22,000 17,000 8,000 48,000 8,000 20,000 12,000 5296400 $185,00 Accounts Payable Other Liabilities Capital Stock Other Contributed Capital Retained Earnings,1 Sales 12,000 5,000 100,000 20,000 40,000 105,000 14,400 $296,400 6,000 4,000 55,000 5,000 15,000 50,000 9 Equity in Subsidiary Income $185,000