Question
Pam Corporation acquired an 80 percent interest in Sun Corporation on January 1, 2017. Financial statements of Pam and Sun Corporations for the year 2017
Pam Corporation acquired an 80 percent interest in Sun Corporation on January 1, 2017. Financial statements of Pam and Sun Corporations for the year 2017 are provided in next page (in thousands):
REQUIRED:
1- Prepare worksheet entries. Only the information provided in statements is available; accordingly, your the financial solution will require standard assumptions. Sun owned unrecorded patents having a fair value of 582,400 with a useful life of 10 years.
- Complete the consolidation income statement for Pop and Sun at 31 of December 2017.
- Complete the consolidation retained earnings for Pop and Sun at 31 of December 2017.
- Complete the consolidation balance sheet for Pop and Sun at 31 of December 2017.
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| Pam | 80% Sun | Adjustments and Eliminations | Consolidated Statements | |
| Debits | Credits | ||||
| Income Statement | |||||
| Sales | 2080 | 520 |
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| Income from Sun | 101.504 |
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| Cost of goods sold | (1300) | (260) |
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| Other expenses | (388) | (104) |
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| Retained Earnings Statement | |||||
| Begg Retained earnings | 1023.36 | 218.4 |
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| Dividends | (260) | (83,2) |
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| Ret earnings 31/12 |
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| Balance Sheet Statement | |||||
| Cash | 1175.44 | 378.8 |
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| Div receiv from Sun | 28.8 |
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| Inventories | 494 | 52 |
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| Note receiv from Pop |
| 26 |
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| Equipmentnet | 1560 | 708 |
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| Investment in Sun | 1066.624 |
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| Patent |
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| Total assets | 4324.864 | 1164.8 |
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| Accounts payable | 442 | 57.6 |
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| Note payable to Sun | 26 |
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| Dividends payable |
| 36 |
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| Capital stock, $10 par | 2600 | 780 |
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| Retained earnings | 1256.864 | 291.2 |
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| Total equities | 4324.864 | 1164.8 |
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Financial Management For Decision Makers
Authors: Peter Atrill, Paul Hurley
2nd Canadian Edition
815
