Exercise 7 (LO 3) Cost method, first year, eliminations, statements. (Note: Read carefully, as this is not the same as Exercise 3 or 5.) Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet: Assets Liabilities and Equit 50,000 100,000 150,000 $300,000 Current assets Depreciable fixed assets $100,000 Crrent liabilities 200,000 Common stock ($10 par) $300,000 Total liabilities and equity The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the cost method to record its investment in Sargent Company. The following trial balances of the two companies are prepared on December 31, 2015 Parker Sargent Current Assets Depreciable Fixed Assets 60,000 400,000 130,000 200,000 106,000 20,00o) 250,000 Investment in Salt Company Current Liabilities Common Stock ($10 par) Retained Earnings, January 1, 20X2 Sales Expenses Dividend Income (from Salt Company).... Dividends Declared 0,000 (40,000 300,000) (100,000 (200,000) (150,000) 50,000 (100,000 5,000 110,000 (4,000 5,000 Total om the ellook andlor oChapten fsubsequent fights reidens mire it. 1. If you did not solve Exercise 3 or 5, prepare a determination and distribution of excess schedule for the investment (a value analysis is not needed) 2. Prepare all the eliminations and adjustments that would be made on the 2015 consolidated worksheet 3. If you did not solve Exercise 3 or 5, prepare the 2015 consolidated income statement and its income distribution schedules. 4. Ifyou did not solve Exercise 3 or 5, prepare the 2015 statement of retained earnings. 5. If you did not solve Exercise 3 or 5, prepare the 2015 consolidated balance sheet