On December 31, 2011, Pen Corporation purchased 80 percent of the stock

1. On December 31, 2011, Pen Corporation purchased 80 percent of the stock of Sut Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2011, Pen Corporation owes Sut $20,000 on accounts payable. (All amounts are in thousands.)

Assets
Cash 128 72
A/R 180 136
Inventories 572 224
Investment In sut 800
Eqiptment—Net 1520 700
3200 1132
Liabilities and Stockholders’equity
A/P 160 132
Common/Stock $20 per 1840 600
Retained Earnings 1200 400
3200 1132

REQUIRED
1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011.
2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of $680,000 and Sut Company reported net income of $360,000. (Separate incomes does not include income from the investment inSut.)

2. Par Corporation acquired 70 percent of the outstanding common stock of Set Corporation on January 1, 2011, for $700,000 cash. Immediately after this acquisition the balance sheet information for the two companies was as follows (in thousands):

Par Book Value Book Value Fair Value
Assets
Cash 140 80 80
Recievables net 320 120 120
Inventories 280 120 200
Land 400 200 240
Buildings—Net 400 280 360
Equiptment Net 320 160 120
Investment in set 700 0 0
Total Asstes 2,600 960 1120
Liabilities and Stockholders’equity
A/P 360 320 320
Other Liabilites 40 200 160
Capital Stock, 20 par 2000 400 -
Retained Earnings 200 40 0
Total equities 2600 960


REQUIRED
1. Prepare a schedule to allocate the difference between the fair value of the investment in Set and the book value of the interest to identifiable and unidentifiable net assets.
2. Prepare a consolidated balance sheet for Par Corporation and Subsidiary at January 1,2011.

3.Adjusted trial balances for Pal and Sor Corporations at December 31, 2011, are as follows (in thousands):
Pal Sor
Debits
Current Assets 960 400
Plant Assets-net 2000 1200
Investment in Sor 1680 --
Cost of sales 1200 1200
Other Expenses 400 200
Dividends 200 ---
6440 3000
Credits
Liabilities 1800 840
Capital Stock 1200 200
Retained Earnings 1360 360
Sales 2000 1600
Income from Sor 80 ---
Total equities 6440 3000

Pal purchased all the stock of Sor for $1,600,000 cash on January 1, 2011, when Sor’s stockholders’ equity consisted of $200,000 capital stock and $3600,000 retained earnings. Sor’s assets and liabilities were fairly valued except for inventory that was undervalued by $80,000 and sold in 2011, and plant assets that were undervalued by $1600,000 and had a remaining useful life of four years from the date of the acquisition.
REQUIRED: Prepare a consolidated balance sheet for Pal Corporation and subsidiary at december 31st 2011.