Comparative adjusted trial balances for Ply Corporation and Ski Corporation are given here. Ply Corporation acquired an 80 percent interest in Ski Corporation on January 1, 2011, for $80,000 cash....

Comparative adjusted trial balances for Ply Corporation and Ski Corporation are given here. Ply Corporation acquired an 80 percent interest in Ski Corporation on January 1, 2011, for $80,000 cash. Except for inventory items that were undervalued by $1,000 and equipment that was undervalued by $4,000, all of Ski’s identifiable assets and liabilities were stated at their fair values on December 31, 2010. The remaining excess was assigned to previously-unrecorded intangibles, which had a 40-year remaining life. Ski Corporation sold the undervalued inventory items during 2011 but continues to own the equipment, which had a four-year remaining useful life as of December 31, 2010. (All amounts are in thousands.)



REQUIRED: Prepare consolidation workpapers for Ply Corporation and Subsidiary for 2011 and 2012 using the financial statement approach. ( Hint: Ply Corporation’s accountant applied the equity method correctly for 2011 but misapplied the equity method for2012.)