3. Sakti Corporation acquired its 20 percent interest in Kunthi Corporation for $25,000 on January 1, 2015,when Kunthi's common stock and retained earnings were $250,000 and $150,000, respectively.4. Pandu's ending balance of inventory at December 31, 2015, includes unrealized profits of $10,000 from Sakti.5. Sakti sold merchandise that cost $20,000 for $30,000 to Kunthi in 2016.6. Pandu and Sakti did not employ the equity method for the intercompany transaction, and an excess of fair value over book value was acquired. Both corporations employed only the equity method for their investments.R E Q u I R E D :

consolidation workpaper for the year ended December 31, 2016.

Financial statement workpaper (with unrealized profits) Comparative financial statements for Pandu Corporation and its subsidiaries, Sakti and Kunthi Corporations, at December 31, 2016, are as follows (in thousands): Pandu Sakti Kunthi Income and Retained Earnings Statement for the Year Ended December 31 Sales $525 $400 $150 Income from Sakti 135 Income from Kunthi 35 10 Cost of sales (300) (200) (75) Other expenses (125) (60) (25) Net income 270 150 50 Add: Beginning retained earnings 450 225 200 Deduct: Dividends (60) (20) (20) Ending retained earnings $660 $355 $230 Balance Sheet at December 31 Cash $327 $171 $85 Accounts receivable-net 80 25 35 Inventories 125 100 80 Equipment-net 500 325 300 Investment in Sakti (90%) 739 Investment in Kunthi (70%) 429 Investment in Kunthi (20%) 59 Total assets $2.200 $680 $500 Accounts payable $140 $15 $10 Other liabilities 100 10 10 Capital stock 1,300 300 250 Retained earnings 660 355 230 Total equities $2.200 $680 $500 ADDITIONAL INFORMATION 1. Pandu Corporation acquired its 90 percent interest in Sakti Corporation for $450,000 on January 1. 2014, when Sakti's common stock and retained earnings were $300,000 and $100,000, respectively. The excess of fair value over book value was allocated to goodwill. 2. Pandu Corporation acquired its 70 percent interest in Kunthi Corporation for $280,090 on January 2. 2014. when Kunthi's common stock and retained earnings were $250,000 and $100,000. respectively. The excess of fair value over book value was related to equipment with a five-year remaining useful life