On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company's stockholders' equity consisted of the following:

Common stock.................................$500,000

Retained earnings...............................190,000

An examination of Stevens Company's assets and liabilities revealed the following at the date of acquisition:

Additional Information-Date of Acquisition
Stevens Company's equipment had an original life of 15 years and a remaining useful life of 10 years. All the inventory was sold in 2014. Stevens Company purchased its bonds payable on the open market on January 10, 2014, for $150,000 and recognized a gain of $55,556. Palmer Company uses the complete equity method to record its investment in Stevens Company. Financial statement data for 2016 are presented on the next page.

Required:
A. Prepare in general journal form the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price in the December 31, 2014, consolidated statements workpaper.
B. Prepare a consolidated financial statements workpaper for the year ended December 31, 2016.
C. Prepare in good form a schedule or t-account showing the calculation of the controlling interest in consolidated net income for the year ended December 31, 2016.
If you completed Problem 5-5 and Problem 5-12, a comparison of the consolidated balances in this problem with those you obtained in Problem 5-5 and Problem 5-12 will demonstrate that the method (cost, partial equity, or complete equity) used by the parent company to record its investment in a consolidated subsidiary has no effect on the consolidated balances.

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Book Value Cash Accounts receivable Inventories Equipment Accumulated depreciation-equipment Land Bonds payable Other $90,726 200,000 160,000 300,000 (100,000) 190,000 (205,556) 54,830 $690,000 Fair Value S 90,726 200,000 210,000 390,000 (130,000) 290,000 (150,000) 54,830 Total Palmer Company Stevens Company Sales Cost of sales Depreciation expense Other expenses Income Equity in subsidiary income from oper ations 1/1 Retained earnings 45,000 12/31 Retained earnings $220,000 Palmer Company Stevens Company Cash Accounts receivable Inventories Investment in Stevens Company $151,000 173,000 81,000 $ 201,200 221,000 100,400 915,800 450,000 (300,000) 360,000 $1,948,400 $323,500 400,000 1,000,000 224,900 $1,948,400 300,000 (140,000) 290,000 $855,000 $135,000 Accumulated depreciation-equipment Accounts payable Bonds payable Common stock Retained earnings 500,000 220,000 $855,000 Total liabilities and equity