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(cnstructive retirement of bonds, intercompany sales) l sements for Par Corporation and is 75 percent-owned subsidiary, Sal Corporation P7-6 for 2012 Fa summarized as follows (in thousands): Par Sal Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 $500 Gain on plan Income from Sal 30 Cost of goods sold (300) (40) (350) Depreclation expense (76) 46) 150 Interest expense Other expenses Net income Add: Beginning retained earnings 100 100 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31, 2012 - s 27 $ 81 Bond interest receivable Other receivables-net Inventories 40 30 Buildings-net Equipment-net 90 150 140 343 70 180 90 Investment in Sal Investment in Par bonds Total assets 870 $ 80 $ 50 10 200 400 210 870 Accounts payable Bond interest payable 10% bonds payable 400 120 600 Common stock Retained earnings Total equities Par Corporation acquired its interest in Sal at book value during 2009, when the fair values of Sal's assets and liabilities were equal to recorded book values. ADDITIONAL INFORMATION 1. Par uses the equity method for its investment in Sal. 2 Intercompany sales of merchandise between the two affiliates totalled $50,000 during 2012. All inter- company balances have been paid except for $10,000 in transit from Sal to Par at December 31,2012 Uirealized profits in Sal's iventories of merchandise acquired from Par were $12,000 at December 31, 2011, and $15,000 at December 31, 2012 Sals d equipment with a six year remaining useful life to Par on January 2, 2010, at a gain of $24 000. The equipment is still in use by Par Par sold a plant to Sal on July 1,2012. The land was sold at a gain of $10,000 and the building, which had a remaining useful life of 10 years, at a gain of $20,000. pusetut ie ad l 6. Sal purchased $100,000 par of Par 10 percent bonds in the open market for $94,000 plus $5,000 accrued interest on December 31, 2012. Interest is paid semiannually on January 1 and July 1, and the bonds mature on January 1, 2017