Pat Corporation acquired an 80 percent interest in Sci Corporation for $480,000 on January 1, 2011, when Sci's stockholders' equity consisted of $400,000 capital stock and $50,000 retained earnings. The excess fair value over book value acquired was assigned to plant assets that were undervalued by $100,000 and to goodwill. The undervalued plant assets had a four-year useful life.

ADDITIONAL INFORMATION

1. Pat's account receivable includes $10,000 owed by Sci.

2. Sci mailed its check for $40,000 to Pat on December 30, 2012, in settlement of the advance.

3. A $20,000 dividend was declared by Sci on December 30, 2012, but was not recorded by Pat.

4. Financial statements for Pat and Sci Corporations for 2012 follow (in thousands):

REQUIRED: Prepare consolidation workpapers for Pat Corporation and Subsidiary for2012.

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Pat Sci Statements of Income and Retained Earnings for the Year Ended December 31 $1,800 76 $600 Sales Income from Sci Cost of sales (1,200) (300) (180) Operating expenses Net Income Add: Retained earnings January I Less: Dividends (380) 296 244 120 100 (200) (40) $180 $ 340 Retained earnings December 31 Balance Sheet at December 31 $ 12 $ 30 Cash Accounts receivable-net Inventories 52 164 40 120 Advance to Sci 40 160 Other current assets 10 320 680 560 $1,988 Land Plant assets-net 60 460 Investment in Sci Total assets $720 Sci Pat $ 30 20 Accounts payable Dividends payable Other liabilities Capital stock Retained earnings Total liabilities and stockholders' equity 48 200 1,400 90 400 340 180 $1.988 $720