PROBLEM 4-3 Consolidated Workpaper, Wholly Owned Subsidiary Perkins Company acquired 100% of Schultz Company on January 1, 2003, for $161,500. On December 31, 2003, the companies prepared the following trial balances: Perkins Schultz Cash $ 25,000 $ 30,000 Inventory 105,000 97,500 Investment in Schultz Company 222,000 - 0- Land 111,000 97,000 Cost of Goods Sold 225,000 59,500 Other Expense 40,000 40,000 Dividends Declared 15,000 10,000 Total Debits $743,000 $334,000 Accounts Payable $ 72,500 $ 17,500 Capital Stock 160,000 75,000 Other Contributed Capital 35,000 17,500 Retained Earnings, 1/1 25,000 54,000 Sales 380,000 170,000 Equity in Subsidiary Income 70,500 - 0- Total Credits $743,000 $334,000 Required: A. What method is being used by Perkins to account for its investment in Schultz Company? How can you tell? B. Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2003. Any difference between the cost of the investment and the book value of equity acquired relates to goodwill