P 2-8 Computations and journal entries with excess of book value over fair value Jen Corporation became a subsidiary of Laura Corporation on July 1, 2011, when Laura paid $1,980,000 cash for 90 percent of Jen's outstanding common stock. The price paid by Laura reflected the fact that Jen's inventories were undervalued by $50,000, and its plant assets were overvalued by $500,000. Jen sold the undervalued inventory items during 2011 but continues to hold the overvalued plant assets that had a remaining useful life of nine years from July 1, 2011. During the years 2011 through 2013, Jen's paid-in capital consisted of $1,500,000 capital stock and $500,000 additional paid-in capital. Jen's retained earnings statements for 2011, 2012, and 2013 were as follows (in thousands): Year Ended December 31, 2011 Year Ended December 31, 2012 Year Ended December 31, 2013 Retained earnings January 1 Add: Net income $525- 250 $600 $700 300 200 Deduct: Dividends (declared in December) (175) (200) (150) Retained earnings December 31 $600 $700 $750 Laura uses the equity method in accounting for its investment in Jen