P $4-7$

Workpapers $($year of acquisition, excess recorded for Inventory, bullding equipment, and goodwill, intercompany balances$)$

Par Corporation acquired a $70$ percent interest in Sol Corporation's outstanding voting common stock on January $1,2011,$ for $$490,000$ cash. The stockholders' equity of Sol on this date consisted of $$500,000$ capital stock and $$100,000$ retained earnings. The difference between the fair value of Sol and the underlying equity acquired in Sol was assigned $$5,000$ to Sol's undervalued inventory, $$14,000$ to undervalued buildings, $$21,000$ to undervalued equipment, and $$60,000$ to goodwill.

The undervalued inventory items were sold during $2011,$ and the undervalued buildings and equipment had remaining useful lives of seven years and three years, respectively. Depreciation is straight line.

At December $31,2011,$ Sol's accounts payable include $$10,000$ owed to Par. This $$10,000$ account payable is due on January $15,2012.$ Par sold equipment with a book value of $$15,000$ for $$25,000$ on June $1,2011.$ This is not an intercompany sale transaction. Separate financial statements for Par and Sol for $2011$ are summarized as follows $($in thousands$)$:

Par Sol

Combined Income and Retained Earnings

Statements for the Year Ended December $31$

$\backslash$table$[[$Sales$,$$ $800,$$$700],[$Income from Sol,$60\mathrm{.}2,-$