Consolidated Workpaper, Partially Owned SubsidiarySubsequent Years LO 5

On January 1, 2016, 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, 2020, the two companies' trial balances were as follows:

	Plank	Scoba
Cash	$42,000	$22,000
Accounts Receivable	21,000	17,000
Inventory	15,000	8,000
Investment in Scoba Company	69,800	0
Land	52,000	48,000
Dividends Declared	10,000	8,000
Cost of Goods Sold	85,400	20,000
Other Expense	10,000	12,000
	$305,200	$135,000
Accounts Payable	$12,000	$6,000
Other Liabilities	5,000	4,000
Capital Stock	100,000	55,000
Other Contributed Capital	20,000	5,000
Retained Earnings, 1/1	48,800	15,000
Sales	105,000	50,000
Equity in Subsidiary Income	14,400	0
	$305,200	$135,000

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

Required:

1. What method is being used by Plank to account for its investment in Scoba Company? How can you tell?
2. Prepare a consolidated statements workpaper at December 31, 2020. Any difference between book value and the value implied by the purchase price relates to subsidiary land.