Pot Coporation acquired all the outstanding stock of Ski Corporation on April 1,2011, for $15,000,000, when Ski's stockholders' equity consisted of $5,000,000 capital stock and $2,000,000 retained earnings. The price reflected a $500,000 undervaluation of Ski's inventory (sold in 2011) and a $3,500,000 undervaluation of Ski's buildings (remaining useful life seven years from April 1, 2011). During 2012, Ski sold land that cost $1,000,000 to Pot for $1,500,000. Pot resold the land for $2,200,000 during 2015. Pot sells inventory items to Ski on a regular basis, as follows (in thousands): Unsold by Ski at Year End Unpaid by Ski at Year End Sales to Ski Cost to Pot 2011 2012 2013 2014 2015 500 1,000 1,200 $300 720 900 30 20 20 18 25 Ski sold equipment with a book vatue of $800,000 to Pot on Jammary 3, 2015, for $1,600,000. This Pot uses the equity method to account for its investment in Ski. The financial statements for Pot quipment had aaining useful life of four years at the time of sale. ad Ski are summarized as follows (in thousands): Pot Combined Income and Retained Earnings Statement for the Year Ended December 31, 2015 Sales Gain on land Gain on equipment Income from Ski Cost of sales Depreciation expense $11,000 700 800 1,380 (15,000) (3,700) (5,000) (2,000) Other expenses 5,100 12,375 2,000 Net income Add: Beginning retained earnings Deduct: Dividends 4,000 Retained canings December 31 Balance Sheet at December 31, 2015 Accounts receivable-net $14475 5,000 $1,170 2,000 5,000 4,000 15,000 $ 500 1,500 2,000 1,000 4,000 Buildings-net 10,000 14,405 1,575 100 7000 4,000 Investment in Ski Total assets Accounts payable 13,000 $ 1,000 ther iabilities