Pam Company purchased 75% of Sal Companys outstanding common stock for $320,000 on January 1, 2011. The remaining 25% had a fair value of $100,000. On the acquisition date, Sal Companys book value was $360,000, it had unpatented technology that was worth $16,000, which was not recorded, and equipment that was undervalued by $20,000. The technology had an eight year estimated useful life and the equipment had a five year remaining useful life. All of its other assets and liabilities had book values that were equal to their fair values.

Pam Company uses the equity method to account for its investment in Sal Company. There were no intra-entity transactions other than dividends and neither company issued additional stock during the 2011 through 2016 time period.

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Complete The Work Sheets For Years 1,2,5,6

Then, prepare a consolidated income statement for the consolidated entity for the year ended December 31, 2015 and a balance sheet for the consolidated entity for December 31, 2015. (Make sure to include a line for total stockholders equity in the balance sheet.)

Year 1:

Year 2

Year 5

Year 6

debitscredits NCICons. Totals Pam Co.Sal Co 220,000) 140,000 Sales Expenses Pams's Pam & Sal separate co. Net Inc Consolidated Net Income NCI in Sal's Income Net Income to Controlling Interest (50,000 28,000 in Sal's earnings 12,000 (92,000)(22,000) (480,000)(145,000) 22,000) Retained Earnings 1/1/11 Net Income Dividends Retained Earnings 12/31/11 92,000 15,000 557,000 (167,000 Current Assets 28,000 30,000 Investment in Sal Co 332,000 Pr unpatented techn Goodwil Total Assets Plant & Equip, net 750,000 440,000 1,110,000 470,000 Liabilities Common Stock Additional Paid in Capital Retained Earnings 12/31/11 NonControlinterest 1/1/11 133,000) 70,000) (150,000 350,000 (557,000)(167,000 (88,000) 65,000 NonControllnterest 12/31/11 Total Liab. & Stkhldrs Equit 1,110,000(470,000 debitscredits NCICons. Totals Pam Co.Sal Co 220,000) 140,000 Sales Expenses Pams's Pam & Sal separate co. Net Inc Consolidated Net Income NCI in Sal's Income Net Income to Controlling Interest (50,000 28,000 in Sal's earnings 12,000 (92,000)(22,000) (480,000)(145,000) 22,000) Retained Earnings 1/1/11 Net Income Dividends Retained Earnings 12/31/11 92,000 15,000 557,000 (167,000 Current Assets 28,000 30,000 Investment in Sal Co 332,000 Pr unpatented techn Goodwil Total Assets Plant & Equip, net 750,000 440,000 1,110,000 470,000 Liabilities Common Stock Additional Paid in Capital Retained Earnings 12/31/11 NonControlinterest 1/1/11 133,000) 70,000) (150,000 350,000 (557,000)(167,000 (88,000) 65,000 NonControllnterest 12/31/11 Total Liab. & Stkhldrs Equit 1,110,000(470,000