Problem Parch Corporation acquired a 90% interest in Sarg Corporation's outstanding voting common stock on January 1, 2003, for $630,000 cash. The stockholders' equity of Sarg on this date consisted of $500,000 capital stock and $200,000 retained earnings. The separate financial statements of Parch and Sarg Corporations at and for the year ended December 31, 2003, summarized as follows (in thousands Parch Sare 5700 S500 Combined Income and Returned Earnings Statement for the year ended Dec 31, 2003 Sales Income from Sarg Gain on land Gain on equipment Cost of sales 03009 (300) (90) Depreciation expenses Other expenses (200) (65) Net income Beginning retained earnings Dividends Retained camnings December 31, 2003 (100) $700 Balance Shear Derwer 31, 2003 Accounts receivables-net Inventories Other current items Land Buildings -net 200 Equipment-net Investment Sarg $1,700 SEO SI $50 Accounts payable Other liabilities Capital stock. Sio par 500 Retained earnings 700 $1.700 S880 During 2003. Parchmade sales of $50,000 to Sare at gross profit of SIS 000. One thind of these sales were inventories by Sarga year end. Sargowed Parch S100,000 on open acum at December 31, 2003 Sare sold land that cost $20,000 for Parch for $30,000 on July 1, 2003, Parch still owns the land. On January 1, 2003, Parch sold equipment with a book value of $20,000 anda remaining useful life of four years to Sarg for $40,000. Sarguses straight-line depreciation and assumes no residual value on this equipment Required Prur sonsodation workine uners for Parch Co o n and Subsidiary for the year Problem Parch Corporation acquired a 90% interest in Sarg Corporation's outstanding voting common stock on January 1, 2003, for $630,000 cash. The stockholders' equity of Sarg on this date consisted of $500,000 capital stock and $200,000 retained earnings. The separate financial statements of Parch and Sarg Corporations at and for the year ended December 31, 2003, summarized as follows (in thousands Parch Sare 5700 S500 Combined Income and Returned Earnings Statement for the year ended Dec 31, 2003 Sales Income from Sarg Gain on land Gain on equipment Cost of sales 03009 (300) (90) Depreciation expenses Other expenses (200) (65) Net income Beginning retained earnings Dividends Retained camnings December 31, 2003 (100) $700 Balance Shear Derwer 31, 2003 Accounts receivables-net Inventories Other current items Land Buildings -net 200 Equipment-net Investment Sarg $1,700 SEO SI $50 Accounts payable Other liabilities Capital stock. Sio par 500 Retained earnings 700 $1.700 S880 During 2003. Parchmade sales of $50,000 to Sare at gross profit of SIS 000. One thind of these sales were inventories by Sarga year end. Sargowed Parch S100,000 on open acum at December 31, 2003 Sare sold land that cost $20,000 for Parch for $30,000 on July 1, 2003, Parch still owns the land. On January 1, 2003, Parch sold equipment with a book value of $20,000 anda remaining useful life of four years to Sarg for $40,000. Sarguses straight-line depreciation and assumes no residual value on this equipment Required Prur sonsodation workine uners for Parch Co o n and Subsidiary for the year
