Pat Corporation acquired a 75% interest in Sun Corporation for

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Pat Corporation acquired a 75% interest in Sun Corporation for $300,000 on January 1, 2009, when Sun’s equity consisted of $150,000 capital stock and $50,000 retained earnings.  The fair values of Sun’s assets and liabilities were equal to their book values on this date.  The excess purchase price was allocated to an unrecorded patent, which ha a remaining life of 10 years.  Pat uses the equity method of accounting for Sun.

During 2009, Pat sold inventory items to Sun for $80,000, and at December 31, 2009, Sun’s inventory included items in which there were $10,000 unrealized profits.  During 2010, Pat sold inventory items to Sun for $130,000, and at December 31, 2010, Sun’s inventory included items on which there were $20,000 unrealized profits.

On December 31, 2010, Sun owed Pat $15,000 on account for merchandise purchases.  The financial statements of Pat and Sun Corporations at and for the year ended December 31, 2010, are summarized as follows:

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Instructions

Prepare consolidation working papers for Pat  Corporation and Subsidiary for the year ended December 31, 2010.

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Please help me which input note should be made to match the balance sheet and liabilities in the problem.

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