Par Corporation acquires an 80 percent interest in Sip Company on January 3, 2011, for $320,000. On

Question:

Par Corporation acquires an 80 percent interest in Sip Company on January 3, 2011, for $320,000. On this date Sip's stockholders' equity consists of $200,000 capital stock and $140,000 retained earnings. The fair value/book value differential is assigned to undervalued equipment with a 6-year remaining life. Immediately after acquisition, Sip sells equipment with a 10-year remaining useful life to Par at a gain of $10,000.

Adjusted trial balances of Par and Sip at December 31, 2011, are as follows (in thousands):

REQUIRED1. Prepare a consolidated income statement for 2011 using entity theory.2. Prepare a consolidated balance sheet at December 31, 2011, using entitytheory.

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