Comparative adjusted trial balances for Ply Corporation and Ski Corporation are given here. Ply Corporation acquired an 80 percent interest in Ski Corporation on January 1, 2011, for $80,000 cash. Except for inventory items that were undervalued by $1,000 and equipment that was undervalued by $4,000, all of Ski's identifiable assets and liabilities were stated at their fair values on December 31, 2010. The remaining excess was assigned to previously-unrecorded intangibles, which had a 40-year remaining life. Ski Corporation sold the undervalued inventory items during 2011 but continues to own the equipment, which had a four-year remaining useful life as of December 31, 2010. (All amounts are in thousands.)

REQUIRED: Prepare consolidation workpapers for Ply Corporation and Subsidiary for 2011 and 2012 using the financial statement approach. ( Hint: Ply Corporation's accountant applied the equity method correctly for 2011 but misapplied the equity method for2012.)

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December 31, 2010 December 31. 2011 December 31, 2012 Ply Ski Ply Ski Ply Ski $ 30 $ 24.7 $ 15 20 S 20 S 26.7 45 Cash Trade receivables-net Dividends receivable $100 30 15 25 30 4 40 100 86.3 105 35 4 40 Inventories 50 20 30 30 Plant and equipment-net Investment in Ski 90 60 55 95 94.3 60 Cost of sales 100 40 30 35 30 110 30 35 35 Operating expenses Dividends 10 10 15 10 $400 $200 $430 $190 $460 $220 $ 35 $ 30 $ 20.7 $ 17.7 $ 15 $ 25 Accounts payable Dividends payable Capital stock Other paid-in capital Retained earnings 10 100 6. 100 40 100 40 40 60 50 20 25 60 70 20 30 60 20 40 90.3 Sales 150 80 160 80 170 16 90 Income from Ski 10.3 $190 S220 $400 $200 $430 $460