Comparative consolidated statements under alternative theories
At December 31, 2011, when the fair values of Sam Corporation’s net assets were equal to their book values of $240,000, Pit Corporation acquired an 80 percent interest in Sam for $224,000. One year later, at December 31, 2012, the comparative adjusted trial balances of the two corporations appear as follows (in thousands):
|
Pit Corporation |
Sam Corporation |
|
|
Cash |
$ 40.8 |
$ 70 |
|
Accounts receivable |
90 |
30 |
|
Inventory |
160 |
40 |
|
Land |
200 |
80 |
|
Buildings |
900 |
200 |
|
Investment in Sam |
240 |
— |
|
Cost of sales |
375 |
200 |
|
Expenses |
150 |
50 |
|
Dividends |
120 |
30 |
|
Total debits |
$2,275.8 |
$700 |
|
Accumulated depreciation |
$ 200 |
$ 60 |
|
Accounts payable |
175.8 |
100 |
|
Capital stock |
800 |
200 |
|
Retained earnings |
360 |
40 |
|
Sales |
700 |
300 |
|
Income from Sam |
40 |
— |
|
Total credits |
$2,275.8 |
$700 |
ADDITIONAL INFORMATION: During 2012, Sam Corporation sold inventory items costing $15,000 to Pit for $23,000. Half of these inventory items remain unsold at December 31, 2012.
REQUIRED: Prepare comparative consolidated financial statements for Pit Corporation and Subsidiary at and for the year ended December 31, 2012, under
1. Traditional theory
2. Parent company theory
3. Entity theory