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Determine the amounts at which the following items will appear in the consolidated financial statements of Pam Corporation and Subsidiary for the year ended December 31, 2016.

10. Interest expense

11. Depreciation expense

P7-5 [Based on AICPA] Computations constructive retirement of subsidiary bonds) Selected amounts from the separate unconsolidated financial statements of Pam Corporation and its 90 percent-owned subsidiary. Sun Company, at December 31, 2016, are as follows (in thousands) Pam Sun 5710 490 $530 370 21 63 16 20 25 Selected Income Statement Amounts Sales Cost of goods sold Gain on sale of equipment Earnings from investment in subsidiary Interest expense Depreciation Selected Balance Sheet Amount Cash Inventories Equipment Accumulated depreciation Investment in Sun Investment in bonds Bonds payable Common stock Additional paid-in capital Retained carings Selected Statement of Retained Earnings Amounts Beginning balance December 31, 2015 Net income Dividends paid S 50 229 440 (200) 189 91 SIS 150 360 (120) (200) (10) (100) (250) (402) (40) (140) $272 212 80 $100 70 30 ADDITIONAL INFORMATION 1. On January 2, 2016, Pam purchased 90 percent of Sun's 100,000 outstanding common stock for cash of $153,00) On that date, Sun's stockholders' equity equaled $150,000 and the fair values of Sun's assets and liabilities equaled their carrying amounts. Pam correctly accounted for the combination as an acquisi tion. The difference between fair value and book value was due to goodwill 2. On September 4, 2016, Sun paid cash dividends of $30,000 3. On December 31, 2016, Pam recorded its equity in Sun's earnings 4. On January 3, 2016, Sun sold equipment with an original cost of $30,000 and a carrying value of $15.000 to Pam for $36,000. The equipment had a remaining life of three years and was depreciated using the straight-line method by both companies 268 CHAPTER 7 5. During 2016 Sun sold merchandise to Pam for $60.000, which included a profit of $20.000. At December 31. 2016, lalf ur this secundis remited in Pame's very 6. On December 31, 2016, Pam paid $91,000 to purchase half of the outstanding bonds issued by Sun. The bonds mature on December 31, 2022. and were originally issued at par. These bonds pay interest annually on December 31 of each year, and the interest was paid to the prior investor immediately before Pam's purchase of the bonds

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