[Appendix] Investment account analysis and trial balance workpapers Pep Company paid $99,000 for a 90 percent interest in Sim on January 5, 2011, when Sim's capital stock was $60,000 and its retained earnings $20,000. Trial balances for the companies at December 31, 2014, are as follows (in thousands): Sim $ 15 25 180 Cash Accounts receivable Plant assets Investmcat in Sim Cost of goods sold Operating expenses Dividends Pep $ 11 15 220 136.8 50 25 20 $477.8 $ 90 80 100 20 71.6 100 - 16.2 $477.8 30 40 10 $300 $ 50 30 60 Accumulated depreciation Liabilities Capital stock Paid-in excess Retained earnings Sales Income from Sim .70 90 $300 The excess fair value over book value acquired was assigned $10,000 to undervalued inventory items that were sold in 2011 and the remainder to patents having a remaining useful life of 10 years from January 1, 2011 REQUIRED 1. Summarize the changes in Pep Company's Investment in Sim account from January 5, 2011, through December 31, 2014. 2. Prepare consolidation workpapers for Pep Company and Sim for 2014 using the trial balance approach for your workpapers. Pep Company and Subsidiary Consolidation Workpapers for the year ended December 31, 2014 Adjustments and Incone Retained Balance Pep Sim Eliminatione Statement Barnings Sheet Debite Cash $ 11,000 $ 15,000 Accounts receivable 15,000 25,000 Plant assets 220,000 180,000 Investment in Sim Patents 136,800 cost of goods sold 50,000 30,000 Operating expenses 25,000 40,000 Dividends 20.000 10,000 $477,000 $300.000 Credits Accumulated depreciation Liabilities $ 90,000 $ 50,000 80,000 30,000 Capital stock 100,000 60,000 Paid-in-exce88 20,000 Retained earnings 71,600 70,000 Sales 100,000 90,000 Income from Bin 16,200 $477.800 200.000 Noncontrolling interest Dec 31, 2013 Noncontrolling interest share ($18,000 adj. inc. x 101) Controlling share of NI Consolidated retained earnings Noncontrolling interest Dec 31, 2014