Balance Sheet Consolidation [AICPA Adapted] Case Inc. acquired all Frey Inc.’s ou...

Balance Sheet Consolidation [AICPA Adapted]

Case Inc. acquired all Frey Inc.’s outstanding $25 par common stock on December 31, 20X3, in exchange for 40,000 shares of its $25 par common stock. Case’s common stock closed at $56.50 per share on a national stock exchange on December 31, 20X3. Both corporations continued to operate as separate businesses maintaining separate accounting records with years ending December 31.

On December 31, 20X4, after year-end adjustments and the closing of nominal accounts, the companies had condensed balance sheet accounts (below).

Additional Information

1. Case uses the equity method of accounting for its investment in Frey.

2. On December 31, 20X3, Frey’s assets and liabilities had fair values equal to the book balances with the exception of land, which had a fair value of $550,000. Frey had no land transactions in

20X4.

3. On June 15, 20X4, Frey paid a cash dividend of $4 per share on its common stock.

4. On December 10, 20X4, Case paid a cash dividend totaling $256,000 on its common stock.

5. On December 31, 20X3, immediately before the combination, the stockholders’ equity balance was:

6. The 20X4 net income amounts according to the separate books of Case and Frey were $890,000 (exclusive of equity in Frey’s earnings) and $580,000, respectively.

Required

Prepare a consolidated balance sheet worksheet for Case and its subsidiary, Frey, for December 31, 20X4. A formal consolidated balance sheet is not required.