Pal Corporation acquired 70 percent of the outstanding voting stock of Sal Corporation for $91,000 cash on January 1, 2011, when Sal’s stockholders’ equity was $130,000. All the assets and liabilities...

Pal Corporation acquired 70 percent of the outstanding voting stock of Sal Corporation for $91,000 cash on January 1, 2011, when Sal’s stockholders’ equity was $130,000. All the assets and liabilities of Sal were stated at fair values (equal to book values) when Pal acquired its 70 percent interest. Financial statements of the two corporations at and for the year ended December 31, 2011, are summarized as follows (in thousands):



REQUIRED
1. Prepare consolidation workpapers for Pal Corporation and Subsidiary for 2011.
2. Prepare a consolidated income statement and a consolidated balance sheet for Pal Corporation andSubsidiary.