P4-6 Workpapers (determine ownership interest, year after acquisition, excess assigned to land and patents)

Separate company financial statements for Pop Corporation and its subsidiary, Son Company, at and for the year ended December 31, 2017, are summarized as follows (in thousands):

Pop Son Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $ 1,600 $400 Income from Son 72 —

Cost of sales (1,000) (200)

Other Expenses (402.4) (104)

Net income 269.6 96 Add: Retained earnings January 1 708 136 Deduct: Dividends (200) (64)

Retained earnings December 31 $ 777.6 $16 8 Balance Sheet at December 31 Cash $ 72 $ 60 Accounts receivable—net 320 80 Dividends receivable from Son 28.8 —

Note receivable from Pop — 20 Inventory 380 40 Investment in Son 878.4 —

Land 260 120 Buildings—net 680 320 Equipment—net 520 200 Total assets $3,139.2 $840 Accounts payable $ 341.6 $ 40 Note payable to Son 20 —

Dividends payable — 32 Capital stock, $40 par 2,000 600 Retained earnings 777.6 168 Total equities $3,139.2 $840 ADDITIONAL INFORMATION 1. Pop Corporation acquired 13,500 shares of Son Company stock for $60 per share on January 1, 2016, when Son’s stockholders’ equity consisted of $600,000 capital stock and $60,000 retained earnings.
2. Son Company’s land was undervalued when Pop acquired its interest, and accordingly, $80,000 of the fair value/book value differential was assigned to land. Any remaining differential is assigned to unrecorded patents with a 10-year remaining life.
3. Son Company owes Pop $20,000 on account, and Pop owes Son $20,000 on a note payable.
REQuIRED:Prepare consolidated workpapers for Pop Corporation and Subsidiary for the year ended December 31, 2017.