P 4-6 Workpapers (determine ownership interest, year after acquisition, excess assigned to land and patents) Separate company financial statements for Pen Corporation and its subsidiary, Syn Company, at and for the year ended December 31, 2012, are summarized as follows (in thousands): Pen Syn $200 $ 800 36 (500) (201.2) 134.8 354 (100) $ 388.8 (100) (52) 48 68 (32) $ 84 Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Syn Cost of sales Other Expenses Net income Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivablenet Dividends receivable from Syn Note receivable from Pen Inventory Investment in Syn Land Buildings-net Equipment-net Total assets $ 36 160 14.4 $ 30 40 10 20 190 439.2 130 340 260 $1,569.6 60 160 100 $420 $ 20 $ 170.8 10 Accounts payable Note payable to Syn Dividends payable Capital stock, $20 par Retained earnings Total equities 1,000 16 300 84 $420 388.8 $1,569.6 ADDITIONAL INFORMATION 1. Pen Corporation acquired 13,500 shares of Syn Company stock for $30 per share on January 1, 2011, when Syn's stockholders' equity consisted of $300,000 capital stock and $30,000 retained earnings. 2. Syn Company's land was undervalued when Pen acquired its interest, and accordingly, $40,000 of the fair value/book value differential was assigned to land. Any remaining differential is assigned to unrecorded patents with a 10-year remaining life. 3. Syn Company owes Pen $10,000 on account, and Pen owes Syn $10,000 on a note payable. REQUIRED: Prepare consolidated workpapers for Pen Corporation and Subsidiary for the year ended December 31, 2012. Syn PEN CORPORATION AND SUBSIDIARY P 4-6 CONSOLIDATION WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 2012 90% | Adjustments & Eliminations | Consolidated in thousands) Pen Debits Credits Statements INCOME STATEMENT | Sales 1 800.0 200.0 1000.0 Income from Syn 1 36.0 | 36.0 Cost of sales (500.0) (100.0) | (600.0) (201.2) | (52.0) (253.2) | Consolidated NI 182.8 Noncontr. interest share 0.0 Controlling share of NI 134.8 182.8 RETAINED EARNINGS Retained earnings--Pen 354.0 354.01 Retained earnings--Syn 68.0 Controlling share of NI 134.8 48.0 182.8 | Dividends (100.0) (32.0)| (132.0) | Other expenses 48.0 68.01 388.8 84.0 472.8 30.01 40.0 Retained earnings--12/31 BALANCE SHEET Cash Accounts receivable Dividends receivable Inventories Note receivable-Pen Investment in Syn 36.0 160.0 14.41 190.0 66.0 200.0 14.4 210.01 10.01 439.2 | 20.0 | 10.0 | 439.2 130.0 340.0 260.0 60.0 160.01 100.0 420.0 Land Buildings-net Equipment-net Patents Total assets Accounts payable Note payable to Syn Dividends payable Capital stock Retained earnings Total equities Noncontrolling interest 1569.6 170.8 10.0 190.0 500.0 360.0 0.0 1989.6 190.8 10.0 16.01 1300.0 472.8 | 20.0 1000.0 388.8 1569.6 16.0 300.0 | 84.0 420.0 0.0 1989.6 0.0 0.0
