Prepare a consolidated balance sheet one year after acquisition
Adjusted trial balances for Pal and Sor Corporations at December 31, 2011, are as follows (in thousands):
|
Pal |
Sor |
|
|
Debits |
$ 480 |
$ 200 |
|
Current assets |
1,000 |
600 |
|
Plant assets—net |
840 |
— |
|
Investment in Sor |
600 |
600 |
|
Cost of sales |
200 |
100 |
|
Other expenses |
100 |
— |
|
Dividends |
$3,220 |
$1,500 |
|
Credits |
$ 900 |
$ 420 |
|
Liabilities |
600 |
100 |
|
Capital stock |
680 |
180 |
|
Retained earnings |
1,000 |
800 |
|
Sales |
40 |
— |
|
Income from Sor |
$3,220 |
$1,500 |
Pal purchased all the stock of Sor for $800,000 cash on January 1, 2011, when Sor’s stockholders’ equity consisted of $100,000 capital stock and $180,000 retained earnings. Sor’s assets and liabilities were fairly valued except for inventory that was undervalued by $40,000 and sold in 2011, and plant assets that were undervalued by $80,000 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 31, 2011.