Pop Corporation acquired a 70 percent interest in Stu Corporation on
January 1,201I\' for $1,400,000, when Stu\'s stockholders\' equity
consisted of $1,000,000 capital stock and $600,000 retained earnings. On
this date, the book value of Stu\'s assets and liabilities was equal to
the fair value, except for inventories that were undervalued by $40,000
and sold in 2011, and plant assets that were undervalued by $160,000
and had a remaining useful life of eight years from January 1. Stu\'s
net income and dividends for 2011 were $140,000 and $20,000,
respectively.
Separate-company balance sheet information for Pop and Stu Corporations at December 31, 2011, follows (in thousands):
Pop Stu
Cash
$ 120 $40
Accounts receivable-customers 880 400
Accounts receivable from PoP - 20
Dividends receivable 14 -
Inventories
1,000 640
Land
200 300
Plant assets-net 1,400 700
Investment in Stu 1,442 -
$5,060 $2,100
Accounts payable-suppliers $ 600 160
Accounts payable to Stu 20 -
Dividends payable 80 20
Long-term debt 1,200 200
Capital stock
2,000 1,000
Retained earnings 1,156 720
$5,060 $2,100
Required:
Prepare consolidated balance sheet work papers for Pop Corporation and Subsidiary at December 31, 2011.
