Pam Corporation paid $960,000 cash for a 100 percent interest in Sun Corporation on January 1, 2017, when Sun's stockholders' equity consisted of $400,000 capital stock and $160,000 retained earnings. Sun's balance sheet on December 31, 2016, is summarized as follows (in thousands):

Pam uses the equity method to account for its interest in Sun. The amortization periods for the fair value/book value differentials at the time of acquisition were as follows:
$ 40,000 Undervalued inventories (sold in 2017)
50,000 Undervalued land
180,000 Undervalued buildings (10-year useful life remaining)
(30,000) Overvalued equipment (5-year useful life remaining)
20,000 Other liabilities (2 years before maturity)
140,000 Goodwill
REQUIRED
1. Prepare a journal entry on Sun's books to push down the values reflected in the purchase price. Use entity theory.
2. Prepare a balance sheet for Sun Corporation on January 1, 2017.
3. Sun's net income for 2017 under the new push-down accounting system is $180,000. What is Pam's income from Sun for 2017?

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Book Value Fair Value S 60 140 120 100 200 180 $ 800 S 100 140 400 160 $ 800 Cash Accounts receivable-net Inventories Land Buildings-net Equipment-net $ 60 140 160 150 380 150 $1,040 $ 100 $ 120 Total assets Accounts payable Other liabilities Capital stock Retained earnings Total equities