On January 1, 2014, Perth Company acquired all of Sharbot Company’s voting stock for \($16\) million in cash. Some of Sharbot’s identifiable assets at the date of acquisition had fair values that were different from reported values, as follows:

Sharbot’s total stockholders’ equity at January 1,2014, was \($4\) million. It is now December 31, 2017 (four years later). Cumulative impairment for the goodwill recognized on this acquisition, to the beginning of 2017, is \($2\) million. Goodwill impairment for 2017 is \($0.5\) million. Perth uses the complete equity method to account for its investment in Sharbot on its own books. December 31, 2017 trial balances for Perth and Sharbot appear below.

In your answers below, show all amounts in thousands.

Required

a. Prepare the working paper to consolidate Perth and Sharbot’s trial balances at December 31, 2017.

b. Prepare the consolidated income statement for 2017, and the consolidated balance sheet at December 31, 2017, in good form.

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(in millions) Plant assets, net (20-year remaining life, straight-line) Identifiable intangibles (5-year remaining life, straight-line). Fair Book value value $ 3 $11 10 0