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Pam Corporation acquired a 90 percent interest in Sun Corporation on January 1 2016 for $2700000 at which time Sun s capital stock and retained earnings were $1500000 and

Pam Corporation acquired a 90 percent interest in Sun Corporation on January 1, 2016, for $2,700,000, at which time Sun s capital stock and retained earnings were $1,500,000 and $900,000, respectively. The fair value cost/book value differential is due to a patent with a 10-year amortization period. Financial statements for Pam and Sun for 2017 are as follows (in thousands): ADDITIONAL INFORMATION 1. Pam sold inventory to Sun for $600,000 during 2016 and $720,000 during 2017; Sun s inventories at December 31, 2016 and 2017, included unrealized profits of $100,000 and $120,000, respectively. 2. On July 1, 2016, Pam sold machinery with a book value of $280,000 to Sun for $350,000. The machinery had a useful life of 3.5 years at the time of intercompany sale, and straight-line depreciation is used. 3. During 2017, Pam sold land with a book value of $150,000 to Sun for $200,000. 4. Pam s accounts receivable on December 31, 2017, includes $100,000 due from Sun. 5. Pam uses the equity method for its 90 percent interest in Sun. REQUIRED: Prepare a consolidation workpaper for Pam and Subsidiary for the year ended December 31, 2017.

Apr 21 2020 View more View Less

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