Subsidiary Acquired with Bonds
Byte Computer Corporation acquired 75 percent of Nofail Software Company’s stock on January 2, 20X3, by issuing bonds with a par value of $50,000 and a fair value of $67,500 in exchange for the shares. Summarized balance sheet data presented for the companies just before the acquisition are as follows:
| Byte Computer Corporation | Nofail Software Company | ||
| Book Value | Fair Value | Book Value | Fair Value |
Cash | $200,000 | $200,000 | $ 50,000 | $ 50,000 |
Other Assets | 400,000 | 400,000 | 120,000 | 120,000 |
Total Debits | $600,000 |
| $170,000 |
|
Current Liabilities | $100,000 | 100,000 | $ 80,000 | 80,000 |
Common Stock | 300,000 |
| 50,000 |
|
Retained Earnings | 200,000 |
| 40,000 |
|
Total Credits | $600,000 |
| $170,000 |
|
Required
Prepare a consolidated balance sheet immediately following the acquisition.
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