Par Corporation acquired a 70 percent interest in Sul Corporation's outstanding voting common stock on January 1, 2011, for $980,000 cash. The stockholders' equity (book value) of Sul on this date con- sisted of $1,000,000 capital stock and $200,000 retained earnings. The differences between the fair value of Sul and the book value of Sul were assigned $10,000 to Sul's undervalued inventory, $28,000 to undervalued 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 2011, 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, 2011, Sul's accounts payable include $20,000 owed to Par. This $20,000 account payable is due on January 15, 2012. Separate financial statements for Par and Sul for 2011 are summarized as follows (in thousands): Par Sul $1,400 (800) (120) (280) 200 200 (100) 300 Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Sul Cost of sales Depreciation expense Other expenses Net income Add: Retained earnings January Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivablenet Dividends receivable Inventories Other current assets Land Buildings-net Equipment-net Investment in Sul Total assets $ 120 140 12388752 ****82230 ***970 200 60 200 320 660 $1,700 Accounts payable Dividends payable Other liabilities Capital stock, $20 par Retained earnings Total equities $ 170 40 190 1.000 300 $1,700 REQUIRED: Prepare consolidation workpapers for Par Corporation and Subsidiary for the year ended December 31, 2011. Use an unamortized excess account. Fair Value of Sul on 1/1 Book Value of Sul on 1/1 Excess $ $ $ 1,400,000 1,200,000 200,000 2011 Basis NAME HERE PAR CORPORATION AND SUBSIDIARY P4-5 CONSOLIDATION WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 2011 70% Adjustments & Eliminatic Consolidated (in thousands) Par Sul Debits Credits Statements INCOME STATEMENT Sales 1,600.0 1,400.0 3,000.0 Income from Sul 119.01 1 119.01 Cost of sales (600.0) (800.0)| (1,400.0) Depreciation expense (308.0) (120.0) (428.0)| 1 Other expenses (320.0) (280.0)| (600.0) Consolidated NI 691.0 Noncontr. interest share 0.0 Controlling share of NI 491.0 200.0 691.0 RETAINED EARNINGS Retained earnings-Parl 600.0 600.0 Retained earnings-Sul 200.0 200.0 Controlling share of NI 491.0 200.0 691.0 Dividends (400.0) (100.0) 1 (500.0) 691.0 300.0 991.0 120.0 140.0 Ret earnings-ending BALANCE SHEET Cash Accounts receivable-net Dividends receivable Inventories Other current assets Land Buildings-net Equipment-net Investment in Sul 172.0 | 200.0 28.0 300.01 140.0 100.0 280.0 1,140.0 1,029.0 200.0 60.0 200.0 320.0 660.0 292.0 340.0 28.01 500.0 200.0 300.0 600.0 1,800.01 1,029.01 0.01 0.0 0.0 5,089.0 Trademarks Goodwill Unamortized excess Total assets Accounts payable Dividends payable Other liabilities Capital stock $10 par Retained earnings Total equities Noncontrolling interest 3,389.0 400.0 200.0 98.01 2,000.0 691.0 3,389.0 1,700.0 170.0 40.0 190.0 1,000.0 300.0 1,700.0 570.0 240.0 288.0 3,000.0 991.01 0.01 1 0.0 0.0 5,089.0