Case study 3

Pam Corporation acquired an 80 percent interest in Sun Corporation on January 1, 2017. Financial statements of Pam and Sun Corporations for the year 2017 are provided in the next page (in thousands):

REQUIRED:

1. Prepare worksheet entries. Only the information provided in the financial statements is available; accordingly, your solution will require some standard assumptions. Sun owned unrecorded patents having a fair value of 582,400 with a useful life of 10 years.
2. Complete the consolidation income statement for Pop and Sun at 31 of December 2017.

3. Complete the consolidation retained earnings for Pop and Sun at 31 of December 2017.

4. Complete the consolidation balance sheet for Pop and Sun at 31 of December 2017.

	Pam	80% Sun	Adjustments and Eliminations		Consolidated Statements
			Debits	Credits
Income Statement
Sales	2080	520
Income from Sun	101.504
Cost of goods sold	(1300)	(260)
Other expenses	(388)	(104)
Retained Earnings Statement
Begg Retained earnings	1023.36	218.4
Dividends	(260)	(83,2)
Ret earnings 31/12
Balance Sheet Statement
Cash	1175.44	378.8
Div receiv from Sun	28.8
Inventories	494	52
Note receiv from Pop		26
Equipmentnet	1560	708
Investment in Sun	1066.624
Patent
Total assets	4324.864	1164.8
Accounts payable	442	57.6
Note payable to Sun	26
Dividends payable		36
Capital stock, $10 par	2600	780
Retained earnings	1256.864	291.2
Total equities	4324.864	1164.8