On January 1, 2015, Peerless Network acquired all of the stock of Sound Telecom for 400 million in cash. At the date of acquisition, Sound Telecom's stockholders' equity was as follows (in millions)

Capital Stock ----- 10

Retained Earnings ----- 50

AOCI ----- 2

Total ----- 62

An evaluation of Sound Telecom's balance sheet at January 1, 2015, revealed that its plant assets (10 year remaining life) were overvalued by 40 million and it had previously unrecorded identifiable intangible assets (5 year remaining life) of 10 million. Goodwil from the acquisition was impaired by 5 million during 2015-2017 and by 1 million in 2018.

It is now December 31, 2018, four years after the acquisition. Sound Telecom reported total net income of 12 million during 2015-2017, and 5 million for 2018. It also reported total other comprehensive income of 1 million during 2015-2017 and 200,000 of other comprehensive loss in 2018. Sound Telecom declared adn paid no dividends during this time period. Peerless Network reports its investment using the complete equity method. The following are the separate Trial balances of Peerless and Sound Telecom at December 31, 2018

	Peerless	Sound
	Dr (Cr)	Dr (Cr)
Current Assets	$175,000	$50,000
Plant assets, net	$860,000	$410,000
Identifiable intangibles	$40,000	$10,000
Investmetn in Sound	$419,800
Liabilities	$(898,500)	$(390,200)
Capital Stock	$(50,000)	$(10,000)
Retained earnings, Jan 1	$(490,000)	$(62,000)
AOCI, Jan 1	$(25,000)	$(3,000)
Sales Revenue	$(1,200,000)	$(650,000)
Equtiy in net income	$(6,000)
Equity in other comprehensive loss	$200
Cost of Sales	$800,000	$450,000
Operating Expenses	$375,000	$195,000
Other comprehensive loss (income)	$(500)	$200

In your answers below, show all numbers in thousands

Required

a) Show how the following balances, appearing in the 2018 trial balances above, were calculated:

1. Equity in net income of Sound Telecom appearing in Peerless Network's 2018 trial balacne

2. Sound Telecom's retained earingings and AOCI balances at January 1, 2018

3. Investment in Sound telecom at December 31, 2018, appearing in Peerless Network's trial balance

b) Prepare the consolidation working paper to consolidate Peerless Network's trial balance accounts with those of Sound Telecom at Decembe 31, 2018.

c) Present the consolidated balance sheet at December 31, 2018, and the consolidated statement of comprehensive income for 2018 in good form.