Pop Corporation acquired 80 percent of Son Corporation's common stock on January 1, 2016, for $420,000 cash. The stockholders' equity of Son at this time consisted of $300,000 capital stock and $100,000 retained earnings. The difference between the fair value of Son and the underlying equity acquired in Son was due to a $25,000 undervaluation of Son's inventory, a $50,000 undervaluation of Son's equipment, and goodwill.
The undervalued inventory was sold by Son during 2016, and the undervalued equipment had a remaining useful life of five years. Straight-line depreciation is used.
Son owed Pop $8,000 on accounts payable at December 31, 2016.
The separate financial statements of Pop and Son Corporations at and for the year ended December 31, 2016, are as follows (in thousands):

Required:
Prepare consolidation work-papers for Pop Corporation and Son at and for the year ended December 31, 2016?

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Pop Son Combined Income and Retained Earnings Statements for the Year Ended December 31 $ 400 $220 Income from Son Cost of sales Depreciation expense Other expenses (160) (80) (51) (80) (40) (20) Net income Add: Retained earnings January 1 Deduct: Dividends 150 (80) 100 (40) Retained earnings December 31 Balance Sheet at December 31 60 80 $ 59 Trade receivables-net Dividends receivable Inventories 16 Land Buildingsnet Equipment-net Investment in Son 130 424 $1,195 $ 80 100 215 $1,195 140 200 Total assets Accounts payable Dividends payable Other liabilities Capital stock, $10 par Retained earnings $100 20 140 $600 Total equities