On January 1, 2011, Peres Company purchases 80% of the common stock of Soap Company for $308,000. On this date, Soap has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Soap Company are as follows:

On January 1, 2011, the only undervalued tangible assets of Soap are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2011. 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.
The trial balances for Peres and Soap are as follows:

Required
1. Prepare a value analysis and a determination and distribution of excess schedule.
2. Peres Company carries the investment in Soap Company under the sophisticated equity method. In general journal form, record the entries that would be made to apply the equity method in 2011 and 2012.
3. Compute the balance that should appear in Investment in Soap Company and in Subsidiary Income on December 31, 2012 (the second year). Fill in these amounts on Peres Company’s trial balance for 2012.
4. Complete a worksheet for consolidated financial statements for 2012. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.

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2011 2012 $60,000 $90,000 Net income . Dividends 20,000 30,000 Peres Company Company 50,000 180,000 Inventory, December 31 -.. .. 100,000 Other Current Assets Investment in Soap Company.. Note 1 50,000 320,000 (60,000) ..-. 50,000 Buildings and Equipment. Accumulated Depreciation Goodwill Other Intangibles Current Liabilities Bonds Payable 350,000 . . [100,000 20,000 ..[120,000 (40,000 (100,000) 200,000) [200,000) 100,000) [204,000) Common Stock Peres Company. Other Paid-In Capital in Excess of Par-Peres Company Other Paid-ln Capital in Excess of Par-Soap Company Relained Earnings-Soap Company Net Sales Cost of Goods Sold... Operating Expenses. Subsidiary Income Dividends Dividends Declared-Soap Company Note 1: To be calculated. (50,000) (100,000) (190,000) (520,000) 450,000] 260,000 100,000 300,000 120,000 Note 1 50,000 1 30,000