Practice Problem On January 1, 2014, Plant Company purchased 80% of the common stock of Sun Company for $775,000. Sun reported the following: 2014 2015 Income Dividends $350,000 $45,000 2016 $360,000 $325,000 $55,000 $65,000 On December 31, 2013, just prior to the acquisition, the balance sheets of Plant Company and Sun Company were as follows: Sun Sun Plant (Book) (Market) Cash $1,650,000 $515,000 $515,000 Accounts receivable (net) 400,000 190,000 190,000 Inventory 600,000 125,000 125,000 Land 900,000 100,000 150,000 $3,550,000 $930,000 $980,000 Liabilities $0 $200,000 $230,000 Common stock Additional paid in capital Retained earnings 500,000 300,000 250,000 100,000 2,800,000 $3,550,000 330,000 $930,000 Required: 1. Assume that Plant accounts for the acquisition using the Equity method. Use the information above as well as the incomplete worksheet information presented on the following pages to consolidate the financial statements for Plant and Sun for 2014, 2015 & 2016. In working the consolidations, please provide the following information: 1. The Equity method entries that Plant would make each year 2. The Allocation Schedule to allocate excess fair values 3. The consolidation entries 4. The Completed worksheets showing the consolidated totals 2. Assume that Plant accounts for the acquisition using the Initial Value method (i.e., the Cost method). Use the information above as well as the appropriate incomplete worksheet information to consolidate the financial statements for Plant and Sun for 2014, 2015 and 2016. Please provide all the same information as #1 above.