F 4-12 Workpapers (two years after acquisition, falr valuelhonk differentials, adiushnenls) Pat Corporation acquired an 80 percent interest in Sci Corporation for $480,000 on January 1, 2011, when Sci's stockholders' equity consisted of $400,000 capital stock and $50,000 retained earnings. The excess fair value over book value acquired was assigned to plant assets that were undervalued by $100,000 and to goodwill. The undervalued plant assets had a fouryear useful life. ADDITIONAL INFORMATION 1. Pat's account receivable includes $10,131! owed by Sci. 2. Sci mailed its check for $40,000 to Pat on December 30, 2012, in seltlement of the advance. 3. A $20,000 dividend was declared by Sci on December 30, 2012, but was not recorded by Pat. 4. Financial statements for Pat and Sci Corporations for 2012 follow (in thousands}: Pat Sci Statements oflncnme and Remind Ear-11mg; for the Year Ended December 31 Sales $1,800 $600 Income from Sci 76 Cost of sales (1200} (300) Operating expenses (380) @) Net Income 296 120 Add: Retained earnings January 1 244 100 Less: Dividends {200} L40) Retained earnings December 31 5 340 m Balance Sheet December 31 Cash 5 12 5 30 Accounts receivablenet 52 40 Inventories 164 120 Advance to Sci 40 Other current assets 160 10 Land 320 60 Plant assetsnet 680 460 Investment in Sci 560 ; Total assets $1.988 m Pat Sci Accounts payable 3 48 S 30 _ Dividends payable 20 Other liabilities 200 90 Capital stock 1,400 400 _ Retained earnings 340 E 'Ibtal liabilities and stockholders' equin 51,988 m l E [I U I E El} : Prepare consolidation workpapers for Pat Corporation and Subsidiary for 2012. PAT CORPORATION AND SUB SIDIARY P 4-12 CONSOLIDATION WORKING PAPERS FOR YEAR ENDED DECEMBER 3 l , 2012 in thousands INCOME STATEMENT Sales Income from Sci Cost of sales Operating expenses Consolidated NI Noncontrolling interest share Controlling share of NI RETAINED EARNINGS Retained earningsPat Retained earningsSci Controllin ; share of NI Dividends Retained earnings 122'31 BALANCE SHEET Cash Receivables-net Advance to Sci Inventories Other current assets Land Plant assetsnet Investment in Sci Dividends receivable Goodwill Total assets Accounts payable Dividends payable Other liabilities Capital stock Retained earnings Total equities Noncontrolling interest Pat 1 ,800 76 (1,200) (330) 296 244 296 (200) 340 12 S2 40 164 160 320 680 560 1,933 48 200 1 ,400 340 1,988 80% | Adjustments &Eliminations| Consolidated | Sci Debits Credits Statements | | | | | 600 | | | 2,400 | | 75 | | 0 | (300) | | | (1,500) | (180) | 25 | | (585) | | | | | 315 | 19 | | 191| 120 | | | 334 | | | | | | | | 244 | 100 | 100 | | 0 | 120 | | | 296 | (40H | 40 | | | | | 200} | 180 | | | 340 | | | | | 30 | 40 | | 82 | 40 | | 10 | 82 | | | 40 | 0 | 120 | | | 284 | 10 | | | 170 | 60 | | | 380 | 460 | 75 | 25 | 1,190 | | | 15 | 0 | | | 44 | | | | 500 | | | 16 | 16 | 0 | | 50 | | 50 | 720 | | | 2,238 | 30 | 10 | | 63 | 20 | 16 | | 4 | 90 | | | 290 | 400 | 400 | | 1,400 | 180 | | | 340 | 720 | | | | | 136 | 136 | | | | | | | i i 2333
