On January 1, 2014, Palmero Company purchased an 80% interest in Santos Company for $2,829,700, at which time Santos Company had retained earnings of $981,400 and common stock of $505,100. On the date of acquisition, the fair value of the assets and liabilities of Santos Company was equal to their book value, except for property and equipment (net), which had a fair value of $1,493,500 and a book value of $591,000. The property and equipment had an estimated remaining life of 10 years. Palmero Company reported net income from independent operations of $397,200 in 2014 and $428,900 in 2015. Santos Company reported net income of $305,900 in 2014 and $399,600 in 2015. Neither company declared dividends in 2014 or 2015. Palmero uses the cost method to account for its investment in Santos.

Prepare in general journal form the entries necessary in the consolidated statements workpapers for the years ended December 31, 2014 and 2015.

{Tn allocate and depreciate the difference between implied and book value} Date Account Titles and Explanation Debit Credit 2014 (To eliminate investment account and create noncontrolling interest account) (To allocate and depreciate the difference between implied and book value) 2015 (To establish reciprocity/convert to equity)