Par Corporation acquired a 70 percent interest in Sol Corporations outstanding voting common stock on January 1, 2011, for $490,000 cash. The stockholders equity of Sol on this date consisted of $500,000 capital stock and $100,000 retained earnings. The difference between the fair value of Sol and the underlying equity acquired in Sol was assigned $5,000 to Sols undervalued inventory, $14,000 to undervalued buildings, $21,000 to undervalued equipment, and $60,000 to goodwill. The undervalued inventory items were sold during 2011, and the undervalued buildings and equipment had remaining useful lives of seven years and three years, respectively. Depreciation is straight line. At December 31, 2011, Sols accounts payable include $10,000 owed to Par. This $10,000 account payable is due on January 15, 2012. Par sold equipment with a book value of $15,000 for $25,000 on June 1, 2011. This is not an intercompany sale transaction. Separate financial statements for Par and Sol for 2011 are summarized as follows (in thousands): Par Sol Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $ 800 $700 Income from Sol 60.2 Gain on equipment 10 Cost of sales (300) (400) Depreciation expense (155) (60) Other expenses (160) (140) Net income 255.2 100 Add: Retained earnings January 1 300 100 Deduct: Dividends (200) (50) Retained earnings December 31 $ 355.2 $150 Balance Sheet at December 31 Cash $ 96 $ 60 Accounts receivablenet 100 70 Dividends receivable 14 Inventories 150 100 Other current assets 70 30 Land 50 100 Buildingsnet 140 160 Equipmentnet 570 330 Investment in Sol 515.2 Total assets $1,705.2 $850 Accounts payable $ 200 $ 85 Dividends payable 100 20 Other liabilities 50 95 Capital stock, $10 par 1,000 500 Retained earnings 355.2 150 Total equities $1,705.2 $850 REQUIRED: Prepare consolidation workpapers for Par Corporation and Sol for the year ended December 31, 2011. Use an unamortized excess account. You must show all adjusting and eliminating entries and the required calculations.

advance accounting chapter 4