P4-5 Excess identifiable to net assets Nick NV acquired a 90 percent interest in Kim NV on January 1, 2014, by paying $9,000,000 cash. At the time, Kim NV’s net assets were $9,000,000. It was also learned that some of Kim NV’s net assets’

book values were different from their fair values. Inventory was overvalued by $100,000, and building with remaining useful life of 6 years was undervalued by $600,000. Separate financial statements of Nick NV and Kim NV at December 31, 2014, are as follows (in thousands):

Nick NV Kim NV Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $ 9,800 $ 4,700 Income from Kim NV 450 —

Cost of sales (6,100) (3,000)

Depreciation expenses (1,000) (500)

Other expenses (150) (700)

Net income 3,000 500 Add: Beginning retained January 1 11,200 4,000 Deduct: Dividends (600) (100)

Retained earnings December 31 $13,600 $ 4,400 Nick NV Kim NV Balance Sheet at December 31 Cash $ 1,800 $ 100 Accounts receivable–net 1,400 600 Inventories 2,000 1,600 Other current assets 1,000 900 Land 3,300 2,800 Buildings–net 4,000 3,400 Equipment–net 2,100 1,900 Investment in Kim NV 9,360 —
Total assets $24,960 $11,300 Accounts payable $4,100 $ 1,300 Other liabilities 3,860 600 Capital stock, $10 par 3,400 5,000 Retained earnings 13,600 4,400 Total liabilities and equities $24,960 $11,300 Kim NV’s accounts payable include $200,000 to Nick NV.
REQuIRED:Prepare consolidation workpapers for Kim NV and Subsidiary for the year ended December 31, 2014.