Problem No: 2 (20-25 minutes) PJ Corporation pays $5,400,000 for an 80 percent interest in Sof Corporation on January 1, 2011, at which time the book value and fair value of Sof's net assets are as follows (in thousands): Book Value Fair Value Current assets $2,000 $3,000 Equipment-net 4,000 6,000 Other plant assets-net 2,000 2,000 Liabilities (3,000) (3,000) Net assets $5,000 $8,000 REQUIRED: Prepare a schedule to allocate the fair value/book value differentials to Sof's net assets. Per Corporation paid $900,000 cash for 90 percent of Sim Corporation's common stock on January 1, 2011, when Sim had $600,000 capital stock and $200,000 retained earnings. The book values of Sim's assets and liabilities were equal to fair values. During 2011, Sim reported net income of $40,000 and declared $20,000 in dividends on December 31. Balance sheets for Per and Sim at December 31, 2011, are as follows (in thousands): Per Sim Assets Cash Receivables-net Inventories Land Equipment-net Investment in Sim Total assets Equities Accounts payable Dividends payable Capital stock Retained earnings Total $ 84 $ 40 100 260 700 100 300 400 1200 200 918 $3,302 $1,000 $ 820 $ 160 120 20 2000 600 362 220 $3,302 $1,000 REQUIRED: Prepare consolidated balance sheet workpapers for Per Corporation and Subsidiary for December 31, 2011