Sim Corporation, a 90 percent-owned subsidiary of Pal Corporation, was acquired on January 1, 2011, at a price of $45,000 in excess of underlying book value. The excess was due to goodwill. Separate financial statements for Pal and Sim for 2012 follow (amounts in thousands):
| Pal | Sim |
Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 |
|
|
Sales | $300 | $100 |
Income from Sim | 31 | — |
Gain on sale of equipment | 9 | — |
Cost of sales | (140) | (50) |
Operating expenses | (60) | (10) |
Net income | 140 | 40 |
Add: Beginning retained earnings | 157 | 70 |
Less: Dividends | (60) | (20) |
Retained earnings, December 31 | $237 | $ 90 |
Balance Sheet at December 31, 2012 |
|
|
Cash | $100 | $ 17 |
Accounts receivable | 90 | 50 |
Dividends receivable | 9 | — |
Inventories | 20 | 8 |
Land | 40 | 15 |
Buildings—net | 135 | 50 |
Equipment—net | 165 | 60 |
Investment in Sim | 158 | — |
Total assets | $717 | $200 |
Accounts payable | $ 98 | $ 30 |
Dividends payable | 15 | 10 |
Other liabilities | 67 | 20 |
Capital stock | 300 | 50 |
Retained earnings | 237 | 90 |
Total equities | $717 | $200 |
ADDITIONAL INFORMATION
1. Pal sold inventory items to Sim during 2011 and 2012 as follows (in thousands):
| 2011 | 2012 |
Sales | $30 | $20 |
Cost of sales to Pal | 15 | 10 |
Unrealized profit at December 31 | 5 | 4 |
2. Pal sold land that cost $7,000 to Sim for $10,000 during 2011. The land is still owned by Sim.
3. In January 2012, Pal sold equipment with a book value of $21,000 to Sim for $30,000. The equipment is being depreciated by Sim over a three-year period using the straight-line method.
4. On December 30, 2012, Sim remitted $2,000 to Pal for merchandise purchases. The remittance was not recorded by Pal until January 5, 2013, and it is not reflected in Pal’s financial statements at December 31, 2012.
REQUIRED : Prepare a consolidation workpaper for Pal Corporation and Subsidiary for the year ended December 31, 2012.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.