The adjusted trial balances of Pin Corporation and its 80 percent-owned subsidiary, Son Corporation, at December 31, 2012, are as follows (in thousands):

Pin acquired its interest in Son for $640,000 on January 1, 2011, when Son's stockholders' equity consisted of $500,000 capital stock and $100,000 retained earnings. The excess cost was due to a $100,000 undervaluation of plant assets with a 5-year remaining useful life and to previously unrecorded patents with a 10-year amortization period. Pin uses a one-line consolidation in accounting for its investment in Son.REQUIRED: Prepare comparative consolidated balance sheets at December 31, 2012, for Pin Corporation and Subsidiary under(a) Parent-company theory and(b) Entitytheory.

Transcribed Image Text:

Pin Son $ 32 $ 20 Cash Receivables-net 120 180 Inventories Plant assets-net 300 150 1,200 752 1,300 750 Investment in Son Cost of sales 600 225 Depreciation Other expenses Dividends 75 271 175 200 $4.400 $ 204 50 $2,000 $ 100 Accounts payable Other liabilities 300 200 500 Capital stock Retained earnings Sales 1,000 800 200 2,000 1,000 Income from Son 96 $4,400 $2,000