On January 1, 2017, Perez Company purchased 90% of the capital stock of Sanchez Company for $85,000. Sanchez had capital stock of $70,000 and retained earnings of $12,000 at that time. On December 31, 2021, the trial balances of the two companies were as shown below. Any difference between book value and the value implied by the purchase price relates to goodwill. A. What method is being used by Perez to account for its investment in Sanchez? How can you tell? B. Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2021. Noncontrolling Consolidated Interest Balance Perez Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2021 Eliminating Entries Perez Sanchez Company Company Dr. Cr. Income Statement Sales 110,000 42,000 Dividend Income 10,800 Total Revenue 120,800 42,000 Cost of Goods Sold Inventory 1/1 14,000 8,000 Purchases 84,000 20,000 Available for sale 98,000 28,000 Inventory 12/31 40,000 15,000 Cost of Goods Sold 58,000 13,000 Other Expenses 10,000 16,000 Total Cost and Expens 68,000 29,000 Net Income 52,800 13,000 Noncontrolling Interest Net Income to Retained Earnings 52,800 13,000 Retained Earnings Statement Retained Earnings 1/1 Perez Company 50,000 Sanchez Company Net Income from Above 52,800 Dividends Declared Perez Company (10,000) Sanchez Company Retained Earnings 12/31 92,800 30,000 13,000 (12,000) 31,000 Balance Sheet Cash 13,000 14,000 Accounts Receivable 22,000 36,000 Inventory 12/31 40,000 15,000 Advance to Sanchez 8,000 Investment in Sanchez 85,000 Difference b/w Implied & Book Value Plant and Equipment 50,000 44,000 Land 17,800 6,000 Total 235,800 115,000 Accounts Payable 6,000 6,000 Other Liabilities 37,000 Advances from Perez 8,000 Common Stock Perez Company 100,000 Sanchez Company 70,000 Retained Earnings from. 92,800 31,000 1/1 Noncontrolling Interest 12/31 Noncontrolling Interest Total 235,800 115,000