Consolidated income and retained earnings (upstream sales, noncontrolling interest)
Por Corporation acquired its 90 percent interest in Sam Corporation at its book value of $1,800,000 on January 1, 2011, when Sam had capital stock of $1,500,000 and retained earnings of $500,000.
The December 31, 2011 and 2012, inventories of Por included merchandise acquired from Sam of $150,000 and $200,000, respectively. Sam realizes a gross profit of 40 percent on all merchandise sold. During 2011 and 2012, sales by Sam to Por were $300,000 and $400,000, respectively. Summary adjusted trial balances for Por and Sam at December 31, 2012, follow (in thousands):
|
Por |
Sam |
|
|
Cash |
$ 500 |
$ 100 |
|
Receivables—net |
1,000 |
250 |
|
Inventories |
1,200 |
500 |
|
Plant assets—net |
1,250 |
2,400 |
|
Investment in Sam—90% |
2,178 |
— |
|
Cost of sales |
4,000 |
1,950 |
|
Other expenses |
1,700 |
800 |
|
Dividends |
500 |
250 |
|
$12,328 |
$6,250 |
|
|
Por |
Sam |
|
|
Accounts payable |
$ 750 |
$ 450 |
|
Other liabilities |
300 |
300 |
|
Capital stock, $10 par |
2,500 |
1,500 |
|
Retained earnings |
1,846 |
750 |
|
Sales |
6,500 |
3,250 |
|
Income from Sam |
432 |
— |
|
$12,328 |
$6,250 |
Required: Prepare a combined consolidated income and retained earnings statement for Por Corporation and Subsidiary for the year ended December 31, 2012.