P 6-3 PAR CORPORATION AND SUBSIDIARY CONSOLIDATION WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 2011 90% Adjustments & Eliminations | Consolidated (in thousands) Par Sag Debits Credits Statements INCOME STATEMENT | Sales 700 500 1,200 Income from Sag 70 70 Gain on land 10 10 Gain on equipment 20 20 Cost of sales (300) (300) (600) Depreciation expense (90) (35) (125) Other expenses (200) (65) (265) Noncontrolling int. share 0 Net income 200 110 310 RETAINED EARNINGS Ret earnings-Par 600 600 Ret earnings-Sag 200 200 Net income 200 110 310 Dividends (100) (50) (150) Ret earnings-ending 700 260 960 BALANCE SHEET Cash 35 30 65 Accts receivable-net 90 110 200 Inventories 100 80 180 Other current items 70 40 110 Land 50 70 120 Buildings-net 200 150 350 Equipment-net 500 400 900 Investment in Sarg 655 655 Total assets 1,700 880 2,580 Accounts payable 160 50 210 Other liabilities 340 70 410 Capital stk, $10 par 500 500 1,000 Retained earnings 700 260 960 Total equities 1,700 380 Noncontrolling interest 0 0 0 2,580P 6-3 workpaper in year of acquisition (downstream and upstream sales) Par Corporation acquired a 90 percent interest in Sag Corporation's outstanding voting common stock on January 1, 2011, for $630,000 cash. The stockholders' equity of Sag on this date consisted of $500,011) capital stock and $200,000 retained earnings. The nancial statements of Par and Sag at and for the year ended December 31, 2011, are summarized as follows (in thousands): Par Sag Combined Income and Retained Eamings Statement for the Year Ended December 31', 2011 Sales $ 7'00 $ 500 Income from Sag 10 Gain on land 10 Gain on equipment 20 Cost of sales (300) [300) Depreciation expense (90) {35) Other expenses (200) {65) Net income 200 1 10 Beginning retained earnings 600 200 Dividends (100) {50) Retained earnings December 31 $ 700 $ 260 Balance Sheet 01 December 31', 20H Cash $ 35 $ 30 Accounts receivablenet 90 1 10 Inventories 100 80 Other current items '30 40 Land 50 3'0 Buildingsnet 200 150 Equipmentnet 500 400 Investment in Sag 655 $1,700 :5 880 Accounts payable S 160 $ 50 Other liabilities 340 3'0 Capital stock, $10 par 500 500 Retained earnings 700 260 $1,700 :5 880 During 201 1, Par made sales of $50,000 to Sag at a gross prot of $15,000. One-third of these sales were inventoried by Sag at year-end. Sag owed Par $10,000 on open account at December 31, 2011. Sag sold land that cost $20,000 to Par for $30,000 on July 1, 2011. Par still owns the land. On January 1, 2011, Par sold equipment with a book value of $20,000 and a remaining useful life of four years to Sag for $40,000. Sag uses straight-line depreciation and assumes no salvage value on this equipment. H E a U I H E I] 1 Prepare a consolidation workpaper for Par and Subsidiary for the year ended December 31, 20 l l
