par corporation acquired a 90 percent interest in sag corporatio 359200

Par Corporation acquired a 90 percent interest in Sag Corporation’s outstanding voting common stock on January 1, 2011, for $630,000 cash. The stockholders’ equity of Sag on this date consisted of $500,000 capital stock and $200,000 retained earnings. The financial statements of Par and Sag at and for the year ended December 31, 2011, are summarized as follows (in thousands):



During 2011, Par made sales of $50,000 to Sag at a gross profit of $15,000. One third of these sales were inventoried by Sag at year end. Sag owed Par $10,000 on open account at December 31, 2011. Sag sold land that cost $20,000 to Par for $30,000 on July 1, 2011. Par still owns the land. On January 1, 2011, Par sold equipment with a book value of $20,000 and a remaining useful life of four years to Sag for $40,000. Sag uses straight line depreciation and assumes no salvage value on this equipment.

REQUIRED: Prepare a consolidation workpaper for Par and Subsidiary for the year ended December 31,2011.