Pal Corporation acquired a 90 percent interest in Sor Corporation on January 1, 2011, for $540,000, at
Question:
Pal Corporation acquired a 90 percent interest in Sor Corporation on January 1, 2011, for $540,000, at which time Sor's capital stock and retained earnings were $300,000 and $180,000, respectively. The fair value/book value differential is goodwill. Financial statements for Pal and Sor for 2012 are as follows (in thousands):
ADDITIONAL INFORMATION
1. Pal sold inventory items to Sor for $120,000 during 2011 and $144,000 during 2012. Sor's inventories at December 31, 2011 and 2012, included unrealized profits of $20,000 and $24,000, respectively.
2. On July 1, 2011, Pal sold machinery with a book value of $56,000 to Sor for $70,000. The machinery had a useful life of 3.5 years at the time of sale, and straight-line depreciation is used.
3. During 2012, Pal sold land with a book value of $30,000 to Sor for $40,000.
4. Pal's accounts receivable on December 31, 2012, includes $20,000 due from Sor.
5. Pal uses the equity method for its 90 percent interest in Sor.
REQUIRED
Prepare a consolidation workpaper for Pal Corporation and Subsidiary for the year ended December 31, 2012.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Advanced Accounting
ISBN: 978-0133451863
12th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith