Exercise 5-12 A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The common stock balance of Saxton Corporation was $3,054,700 on this date, and the balance in retained earnings was $1,009,400. The cost of the investment to Palm Incorporated was $3,680,700 The balance sheet information available for Saxton Corporation on the acquisition date revealed these values: Book Value Fair Value Inventory (FIFO) $689,600 $791,600 Equipment (net) 2,035,600 2,035,600 Land 1,630,100 2,016,200 The equipment was determined to have a 15-year useful life when purchased at the beginning of 2009. Saxton Corporation reported net income in 2014 of $248,700 and $298,400 in 2015, No dividends were declared in either of those years. 4. Your answer is partially correct. Try again Prepare the workpaper entries, assuming that the cost method is used to account for the investment, to establish reciprocity, to eliminate the Investment account, and to allocate and depreciate the differenon between book value and the value implied by the purchase price in the 2015 consolidated statements workpaper (Round answers to o decimal places. 5,125. Il no entry is required, select "No Entry for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Investment in Subsidiary Retained Earnings FULL SCREEN PRINTER VERSION (BACK Debit Credit Account Titles and Explanation Investment in Subsidiary Retained Earnings (To establish reciprocity/convert to equity) Retained Earnings Premium on Common Stoc 3054700 Difference between Implie Investment in Subsidiary Noncontrolling Interest (To eliminate the investment amount and create noncontrolling interest account) Retained Earnings Noncontrolling Interest Iland Difference between Implie CEN PRINTER VERSION 4 BACK Retained Earnings (To establish reciprocity/convert to equity) Retained Earnings Premium on Common Stoc 3054700 Difference between Implie Investment in Subsidiary Noncontrolling Interest (To eliminate the investment amount and create noncontrolling interest account) Retained Earnings Noncontrolling Interest Land Difference between Implie Gain on Acquisition Noncontrolling Interest (To allocate and depreciate the difference between implied and book value)