Question: Pam Corporatioh acquired a7u percerit ieres Pam Corporation acquired a 70 percent interest in Sun Corporation's outstanding voting common stock on January 1, 2016, for $980,000 cash. The stockholders' equity (book value) of Sun on this date consisted of $1,000,000 capital stock and $200,000 retained earnings. The differences between the fair value of Sun and the book value of Sun were assigned $10,000 to Sun'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 2016, 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, 2016, Sun's accounts payable include $20,000 owed to Pam. This $20,000 account payable is due on January 15, 2017 Separate financial statements for Pam and Sun for 2016 are summarized as follows (in thousands) 9 3 0 6 Pam Sun Statements for the Year Ended December 31 Pam Sun Statements for the Year Ended December 31 $ 1,600$1400 119 (600) (308) (320) Income from Sun Cost of sales (800) (120) (280) 200 200 (400)(100 $ 691S 300 Other expenses Net income Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 Sun Balance Sheet at December 31 Cash 200 140 Sun- 120 140-200 60 200 220 600-700-170 40 190 000 300-700- $11 $ 170 200 28 300 140 100 250 140 009 400 200 98 000 9 DrU r1 2