Workpaper (incomplete equity method, upstream sale)Pic Corporation acquired an 80 percent...

Workpaper (incomplete equity method, upstream sale)

Pic Corporation acquired an 80 percent interest in Sic Company on January 1, 2011, for $136,000, when Sic’s capital stock and retained earnings were $100,000 and $70,000, respectively.

At the beginning of 2011, Sic sold a machine to Pic for $ 10,000. The machine had cost Sic $7,000, had depreciated $2,000 while being used by Sic, and had a remaining useful life of five years from the date of sale.

Trial balances of the two companies on December 31, 2011 and 2012, are as follows (in thousands):

REQUIRED: Prepare consolidation workpapers for Pic Corporation and Subsidiary for the year ended December 31, 2011, and die year ended December 31, 2012.