Subsidiary Acquired for Cash
Fineline Pencil Company acquired 80 percent of Smudge Eraser Corporation’s stock on January 2, 20X3, for $72,000 cash. Summarized balance sheet data for the companies on December 31, 20X2, are as follows:
| Fineline Pencil Company | Smudge Eraser Corporation | ||
| 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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