Using equity method, Prepare the required elimination entries on December 31, 2011. Show your computations

Par Corporation acquired a 70 percent interest in Sol Corporation's common stock on January 1, 2011, for $490,000 cash. The stockholders' equity of Sol on this date consisted of $500,000 capital stock and $100,000 retained earnings. The difference between the fair value of Sol and the underlying equity acquired in Sol was assigned $5,000 to Sol's undervalued inventory, S14,000 to overvalued buildings, $21,000 to undervalued equipment, and remaining amount to goodwill. The undervalued inventory items were sold during 2011, and the overvalued buildings and undervalued equipment had remaining useful lives of seven years and three years, respectively. Depreciation is straight line. At December 31, 2011, Sol's accounts payable include $10,000 owed to Par. Separate financial statements for Par and Sol for 2011 are summarized as follows in thousands): Par Sol $700 $ 800 60.2 10 Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Sol Gain on equipment Cost of sales Depreciation expense Other expenses Net income Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 (300) (155) (160) 255.2 300 (200) $ 355.2 (400) (60) (140) 100 100 (50) $150 $ 96 100 150 Balance Sheet at December 31 Cash Accounts receivable-net Dividends receivable Inventories Other current assets Land Buildings net Equipment-net Investment in Sol Total assets 70 50 140 570 515.2 $1.705.2 100 30 100 160 330 $850 $ 85 Accounts payable $ 200 Dividends payable 100 Other liabilities Capital stock, $10 par 1.000 500 Retained earnings 355.2 150 Total equities $1,705.2 $850 Required: Using equity method, Prepare the required elimination entries on December 31, 2011. Show your computations