1. On December 31, 2011, Pen Corporation purchased 80 percent of the stock of Sut Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2011, Pen Corporation owes Sut $20,000 on accounts payable. (All amounts are in thousands.)AssetsCash 128 72A/R 180 136Inventories 572 224Investment In sut 800 Eqiptmentâ€”Net 1520 7003200 1132Liabilities and Stockholdersâ€™equityA/P 160 132Common/Stock $20 per 1840 600Retained Earnings 1200 4003200 1132REQUIRED1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011.2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of $680,000 and Sut Company reported net income of $360,000. (Separate incomes does not include income from the investment inSut.)2. Par Corporation acquired 70 percent of the outstanding common stock of Set Corporation on January 1, 2011, for $700,000 cash. Immediately after this acquisition the balance sheet information for the two companies was as follows (in thousands):Par Book Value Book Value Fair Value AssetsCash 140 80 80Recievables net 320 120 120Inventories 280 120 200Land 400 200 240 Buildingsâ€”Net 400 280 360Equiptment Net 320 160 120Investment in set 700 0 0Total Asstes 2,600 960 1120Liabilities and Stockholdersâ€™equityA/P 360 320 320Other Liabilites 40 200 160Capital Stock, 20 par 2000 400 -Retained Earnings 200 40 0Total equities 2600 960REQUIRED1. Prepare a schedule to allocate the difference between the fair value of the investment in Set and the book value of the interest to identifiable and unidentifiable net assets.2. Prepare a consolidated balance sheet for Par Corporation and Subsidiary at January 1,2011.3.Adjusted trial balances for Pal and Sor Corporations at December 31, 2011, are as follows (in thousands):Pal Sor DebitsCurrent Assets 960 400 Plant Assets-net 2000 1200 Investment in Sor 1680 — Cost of sales 1200 1200 Other Expenses 400 200 Dividends 200 — 6440 3000CreditsLiabilities 1800 840 Capital Stock 1200 200 Retained Earnings 1360 360 Sales 2000 1600 Income from Sor 80 —Total equities 6440 3000Pal purchased all the stock of Sor for $1,600,000 cash on January 1, 2011, when Sorâ€™s stockholdersâ€™ equity consisted of $200,000 capital stock and $3600,000 retained earnings. Sorâ€™s assets and liabilities were fairly valued except for inventory that was undervalued by $80,000 and sold in 2011, and plant assets that were undervalued by $1600,000 and had a remaining useful life of four years from the date of the acquisition.REQUIRED: Prepare a consolidated balance sheet for Pal Corporation and subsidiary at december 31st 2011.
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