P 4-2 Workpaper in Year of Acquisition Liam AB acquired Theo AB's 80 percent ownership on January 1, 2014 for $10,000,000, when Theo AB's stockholders' equity consisted of $2,000,000 capital stock and $8,000,000 retained earnings.Theo AB's assets and liabilities book values were the same with the fair values during that period. The sepa- rate financial statements of Liam AB and Theo AB on December 31, 2014 are as follows (in thousands): Liam AB Theo AB Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Theo AB Cost of sales Expenses $ 67,000 $30,500 $ 1,200 $42,000) ($25,000) ($21,900) (S 4,000) s 4,300 $ 1,500 $ 11,600 8,000 s 3 Net income Add: Beginning retained January Deduct: Dividends (S 500) Retained earnings December 31 12,900 Balance Sheet at December 31 Cash Accounts receivable-net Dividends receivable $ 800 $ 600 $ 1,300 $ 800 $ 400 $ 2,600 S 400 S 1,200 S 1,800 3,000 4.200 s 3,200 S 3,600 s 2,200 S 2,400 Other current assets Land Buildings-net Equipment-net Investment in Theo AB $10.800 Total Assets P 4-2 Workpaper in Year of Acquisition Liam AB acquired Theo AB's 80 percent ownership on January 1, 2014 for $10,000,000, when Theo AB's stockholders' equity consisted of $2,000,000 capital stock and $8,000,000 retained earnings.Theo AB's assets and liabilities book values were the same with the fair values during that period. The sepa- rate financial statements of Liam AB and Theo AB on December 31, 2014 are as follows (in thousands): Liam AB Theo AB Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Theo AB Cost of sales Expenses $ 67,000 $30,500 $ 1,200 $42,000) ($25,000) ($21,900) (S 4,000) s 4,300 $ 1,500 $ 11,600 8,000 s 3 Net income Add: Beginning retained January Deduct: Dividends (S 500) Retained earnings December 31 12,900 Balance Sheet at December 31 Cash Accounts receivable-net Dividends receivable $ 800 $ 600 $ 1,300 $ 800 $ 400 $ 2,600 S 400 S 1,200 S 1,800 3,000 4.200 s 3,200 S 3,600 s 2,200 S 2,400 Other current assets Land Buildings-net Equipment-net Investment in Theo AB $10.800 Total Assets