Pony Corporation acquired all of Stallion Companys common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported by Stallion was $150,000. The entire differential was assigned to depreciable assets with a six-year remaining economic life from January 1, 20X5.

The adjusted trial balances for the two companies on December 31, 20X5, are as follows:

Pony CorporationStallion CompanyItemDebitCreditDebitCreditCash$ 15,000$ 5,000Accounts Receivable30,00040,000Inventory70,00060,000Depreciable Assets (net)325,000225,000Investment in Stallion Company195,000Depreciation Expense25,00015,000Other Expenses105,00075,000Dividends Declared40,00010,000Accounts Payable$ 50,000$ 40,000Notes Payable100,000120,000Common Stock200,000100,000Retained Earnings230,00050,000Sales200,000120,000Income from Stallion Company25,000$ 805,000$ 805,000$ 430,000$ 430,000

Pony uses the equity method in accounting for its investment in Stallion. Stallion declared and paid dividends on December 31, 20X5.

Required:

Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet.

Prepare a three-part consolidation worksheet as of December 31, 20X5.