E 5-11 Upstream sales On January 1, 2009, Pam Corporation acquired 60 percent of the voting common shares of Sun Corporation at an excess of fair value over book value of $1,000,000. This excess was attributed to plant assets with a remaining useful life of five years. For the year ended December 31, 2016, Sun prepared condensed financial statements as follows (in thousands):

Condensed Balance Sheet at December 31, 2016 Current assets (except inventory) $ 600 Inventories 300 Plant assets—net 5,000 Total assets $ 5,900 Liabilities $ 400 Capital stock 3,400 Retained earnings 2,100 Total equities $5,900 Condensed Statement of Income and Retained Earnings Sales $1,000 Cost of sales (500)

Other expenses (300)

Net income 200 Add: Retained earnings January 1, 2016 2,000 Less: Dividends (100)

Retained earnings December 31, 2016 $ 1,900 Sun regularly sells inventory items to Pam at a price of 120 percent of cost. In 2015 and 2016, sales from Sun to Pam are as follows:

2015 2016 Sales at selling price $840 $960 Inventory unsold by Pam on December 31 120 360