Consolidated Workpaper, Partially Owned Subsidiary- Subsequent Years On January 1, 2022, Perez Company purchased 90% of the capital stock of Sanchez Company for $85,000. Sanchez Company had capital stock of $70,000 and retained earnings of $12,000 at that time. On December 31, 2026, the trial balances of the two companies were: Perez Sanchez Cash Accounts receivable Inventory, 1/1 Advance to Sanchez Company Investment in Sanchez Company $13,000 $ 14,000 22,000 36,000 14,000 8,000 8,000 -0 85,000 -0 Plant and equipment 50,000 44,000 Land 17,800 6,000 Dividends declared 10,000 12,000 Purchases Other expense 84,000 20,000 10,000 16,000 Total debits $313,800 $156,000 Accounts payable $ 6,000 $6,000 Other liabilities 37,000 -0 Advance from Perez Company -0- 8,000 Capital stock 100,000 70,000 Retained earnings 50,000 30,000 Sales 110,000 42,000 Dividend income 10,800 0 Total credits Inventory, 12/31 $313,800 $156,000 $ 40,000 $15,000 Any difference between book value and the value implied by the purchase price relates to goodwill. Required: A. What method is being used by Perez to account for its investment in Sanchez Company? How can you tell? B. Prepare a workpaper for the preparation of consolidated financial statements on 12/31/2026.