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

Inc.

For each method:

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

2. Provide the income statement impact for 2017 and declare which method is being used.

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