On January 1, 2014, Kane Corp. issued shares of its common stock to acquire all of the outstanding common stock of Dean Inc. Dean's book value was only $140,000 at the time, but Kane issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. The buildings (ten-year life) were undervalued on Dean's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill.

Following are the individual financial records for these two companies for the year ended December 31, 2017.

	Kane Corp.	Dean Inc.
Revenues	($372,000)	($108,000)
Expenses	264,000	72,000
Equity in Subsidiary Earnings	(25,000)	(0)
Net Income	($133,000)	($ 36,000)
Retained Earnings, 1/1/17	($765,000)	($102,000)
Net Income (above)	(133,000)	(36,000)
Dividends Paid	84,000	24,000
Retained Earnings, 12/31/17	($814,000)	($114,000)
Current Assets	$ 150,000	$ 22,000
Investment in Dean Inc.	242,000	0
Buildings (net)	525,000	85,000
Equipment (net)	389,250	129,000
Total Assets	$1,306,250	$236,000
Liabilities	($ 82,250)	($ 50,000)
Common Stock	(360,000)	(72,000)
Additional Paid-In Capital	(50,000)	(0)
Retained Earnings, 12/31/17 (above)	(814,000)	(114,000)
Total Liabilities and Stockholders' Equity	($1,306,250)	($236,000)

Required: A. Prepare a fair value allocation and goodwill schedule at the date of the acquisition.

B. Prove which method (equity, partial equity or initial value) Kane Corp. is using to track its investment in Dean Inc.

For each method(equity, partial equity and initial value):

1. Prepare the journal entries that Kane Corp. would make for this investment in 2017 on Kanes individual books.

2. Provide the income statement impact for 2017 under each method and declare which method is

being used.

C. Prepare the consolidation entries for 2017 in journal entry form.

D. Prepare a consolidation worksheet for this business combination.