Question 2 Perez Co, acquired 100% of Sanchez Co. on 1/1/2019. On 12/31/2019, the two companies prepared the following balances (except the retained earnings account balance on 1/1/2019): Sanchez 35.000 97,500 Cash Inventory Investment in Sanchez Co. Land Cost of goods sold Other expenses Dividend declared Perez 30,000 105.000 222.000 111.000 225.000 40,000 15,000 97,000 59.500 40,000 10,000 Account Payable Common stock Other contributed capital Retained earnings. 1/1 Sales Equity in Subsidiary in Income 77,500 160,000 35.000 25,000 380,000 70.500 22,500 75,000 17.500 54,000 170,000 c. What is method is being used by Perez Co. to account for its investment in Sanchez Co.? Explain why? d. Prepare a workpaper for the preparation of the consolidated financial statements on 12/31/2019. Assume that any difference between the value implied by the purchase price and book value of equity acquired relates to goodwill. SAID