Prime Company holds 75 percent of Lane Companys stock, acquired on January 1, 20X2, for $225,000. On the date of acquisition, Lane reported retained earnings of $60,000 and $150,000 of common stock outstanding, and the fair value of the noncontrolling interest was $75,000. Prime uses the fully adjusted equity method in accounting for its investment in Lane. Trial balance data for the two companies on December 31, 20X7, are as follows: Prime Company Lane Company Item Debit Credit Debit Credit Cash and Accounts Receivable $ 153,000 $ 65,000 Inventory 238,000 95,000 Land 108,000 95,000 Buildings and Equipment 540,000 158,000 Investment in Lane Company Stock 254,050 Cost of Goods Sold 170,000 75,000 Depreciation and Amortization 24,000 16,000 Other Expenses 24,000 14,000 Dividends Declared 70,000 45,000 Accumulated Depreciation $ 338,250 $ 52,000 Accounts Payable 65,000 21,000 Bonds Payable 210,000 35,000 Common Stock 350,000 150,000 Retained Earnings 338,900 150,000 Sales 240,000 155,000 Income from Subsidiary 38,900 Total $ 1,581,050 $ 1,581,050 $ 563,000 $ 563,000 Additional Information 1. At the date of combination, the book values and fair values of Lanes separately identifiable assets and liabilities were equal. The full amount of the increased value of the entity was attributed to goodwill. At December 31, 20X6, the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Lane stock and recognized an impairment loss of $24,000. No further impairment occurred in 20X7. 2. On January 1, 20X5, Lane sold land for $7,000 that had cost $15,000 to Prime. 3. On January 1, 20X6, Prime sold to Lane equipment that it had purchased for $124,000 on January 1, 20X1. The equipment has a total 20-year economic life and was sold to Lane for $114,000. Both companies use straight-line depreciation. 4. Intercompany receivables and payables total $8,000 on December 31, 20X7. Required: a. Prepare a reconciliation between the balance in Primes Investment in Lane Company Stock account reported on December 31, 20X7, and Lanes book value.

b-1. Prepare all worksheet consolidation entries needed as of December 31, 20X7.

b-2. Complete a three-part consolidation worksheet for 20X7