P4-5 Workpapers in year of acquisition (excess recorded for inventory, building, equipment, trademarks, and goodwill) Pam Corporation acquired a 70 percent interest in Sun Corporation's outstanding voting common stock on January 1, 2016, for $980,000 cash. The stockholders' equity (book value) of Sun on this date consisted of $1,000,000 capital stock and $200,000 retained earnings. The differences between the fair value of Sun and the book value of Sun were assigned $10,000 to Sun's undervalued inventory, $28,000 to under- valued buildings, $42,000 to undervalued equipment, and $80,000 to previously unrecorded trademarks. Any remaining excess is goodwill. The undervalued inventory items were sold during 2016, and the undervalued buildings and equipment had remaining useful lives of seven years and three years, respectively. The trademarks have a 40-year life. Depreciation is straight line. At December 31, 2016, Sun's accounts payable include $20,000 owed to Pam. This $20,000 account payable is due on January 15, 2017. Separate financial statements for Pam and Sun for 2016 are summarized as follows (in thousands): Pam Sun $1,400 Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Sun Cost of sales Depreciation expense Other expenses Net income Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 $ 1,600 119 (600) (308) (320) 491 600 (400) $ 691 (800) (120) (280) 200 200 (100) $ 300 Pam Sun $ 120 140 Balance Sheet at December 31 Cash Accounts receivablenet Dividends receivable Inventories Other current assets Land Buildingsnet Equipment-net Investment in Sun Total assets $ 172 200 28 300 140 100 280 1,140 1,029 $ 3,389 200 60 200 320 660 $1,700 Accounts payable Dividends payable Other liabilities Capital stock, $20 par Retained earnings Total equities $ 400 200 98 2,000 691 $ 3,389 $ 170 40 190 1,000 300 $1,700 REQUIRED: Prepare consolidation workpapers for Pam Corporation and Subsidiary for the year ended December 31, 2016. Use an unamortized excess account