1- Workpapers (year of adquisicion, fair value/book value differentials, intercompanu balances) Pik Corporation acquired 80 percent...

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1- Workpapers (year of adquisicion, fair value/book value differentials, intercompanu balances) Pik Corporation acquired 80 percent of Sel Corporation's common stock on January 1, 2011, for $210,000 cash. The stockholders' equity of Sel at this time consisted of $150,000 capital stock and $50,000 retained earnings. The difference between the fair value of Sel and the underlying equity acquired in Sel was due to a $12,500 undervaluation of Sel's inventory, a $25,000 undervaluation of Sel's equipment, and goodwill. The undervalued inventory items were sold by Sel during 2011, and the undervalued equipment had a remaining useful life of five years. Straight-line depreciation is used. Sel owed Pik $4,000 on accounts payable at December 31, 2011. The separate financial statements of Pik and Sel Corporations at and for the year ended December 31, 2011, are as follows (in thousands): Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Sel Cost of sales Depreciation expense Other expenses Net income Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Trade receivables-net Dividends receivable Inventories Land Buildings-net Equipment-net Investment in Sel Total assets Pik Sel $200 $110 18 (80) (40) (40) (20) (25.5) (10) 72.5 40 75 50 (40) (20) $107.5 $70 $29.5 $30 28 40 8 40 30 15 30 65 70 200 100 212 $597.5 $300 Pik Sel Accounts payable $ 40 $50 Dividends payable 100 10 Other liabilities 50 20 Capital stock, $10 par 300 150 Retained earnings 107.5 70 Total equities $597.5 $300 Prepare consolidation workpapers for Pik Corporation and Sel at and for the year ended December 31, 2011. 1- Workpapers (year of adquisicion, fair value/book value differentials, intercompanu balances) Pik Corporation acquired 80 percent of Sel Corporation's common stock on January 1, 2011, for $210,000 cash. The stockholders' equity of Sel at this time consisted of $150,000 capital stock and $50,000 retained earnings. The difference between the fair value of Sel and the underlying equity acquired in Sel was due to a $12,500 undervaluation of Sel's inventory, a $25,000 undervaluation of Sel's equipment, and goodwill. The undervalued inventory items were sold by Sel during 2011, and the undervalued equipment had a remaining useful life of five years. Straight-line depreciation is used. Sel owed Pik $4,000 on accounts payable at December 31, 2011. The separate financial statements of Pik and Sel Corporations at and for the year ended December 31, 2011, are as follows (in thousands): Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Sel Cost of sales Depreciation expense Other expenses Net income Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Trade receivables-net Dividends receivable Inventories Land Buildings-net Equipment-net Investment in Sel Total assets Pik Sel $200 $110 18 (80) (40) (40) (20) (25.5) (10) 72.5 40 75 50 (40) (20) $107.5 $70 $29.5 $30 28 40 8 40 30 15 30 65 70 200 100 212 $597.5 $300 Pik Sel Accounts payable $ 40 $50 Dividends payable 100 10 Other liabilities 50 20 Capital stock, $10 par 300 150 Retained earnings 107.5 70 Total equities $597.5 $300 Prepare consolidation workpapers for Pik Corporation and Sel at and for the year ended December 31, 2011.