Pan Corporation acquired a 75 percent interest in Saf Corporation on January 1, 2011. Financial statements of Pan and Saf Corporations for the year 2011 are as follows (in thousands):

REQUIRED
Prepare consolidation workpapers for Pan Corporation and Subsidiary for the year ended December 31, 2011. Only the information provided in the financial statements is available; accordingly, your solution will require some standard assumptions. Saf owned unrecorded patents having a fair value of $112,000, and a useful life of 10 years.

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Pan Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Saf Cost of sales Other expenses $200 27.6 (500) (100) 194)(52) 48 68 32) Net income 133.6 360 100) S393.6 Add: Retained earnings January 1 Deduct: Dividends Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivablenet Dividends receivable from Saf S 106 172 $ 30 40 12 190 Note receivable from Pan Buildings-net Equipment net Investment in Saf 130 340 260 363.6 10 60 160 100 Total assets S1.573.6 $420 Accounts payable Note payable to Saf Dividends payable S 170 10 $ 20 16 300 84 $1,573.620 Capital stock, $10 par 1,000 Retained earnings 393.6 Total equities