First Company acquired 75% $450,000 of the common stock of Second Company January 1, year one, for The consideration given was proportional to Second's fair value. On that date, Second had the following trial balance: account debit credit Additional paid in capital (credit) $100,000 Building (12-year life) (debit) $250,000 Common stock (credit) 170,000 Current assets (debit)170,000 Equipment (6-yr life) (debit)160,000 Land (debit)110,000 Liabilities (due in 4 years) (credit) 300,000 Retained earnings 1/year 1 (credit) 120,000 Totals $690,000 $690,000 During year one, Second reported net income of $60,000 During year one, Second paid dividends of $30,000. During year two, Second reported net income of $80,000. During year two, Second paid dividends of $40,000 On January 1, year one, some of Seconds assets have the following fair values: Land $122,000 Building $262,000 Equipment $172,000 There was no impairment of any goodwill arising from the acquisition

Please indicate clearly which method you choose for First company to use to account for its acquisition of Second Company.

A. Use the data for the First Company acquisition of some of Second Company to prepare the consolidation worksheet entries for December 31 of year one.

B. Use the data for the First Company acquisition of some of Second Company to prepare the consolidation worksheet entries for December 31 of year two.