On January 1, 2016, Pai, a U.S. firm, purchases all the outstanding capital stock of Sta, a British firm, for $880,000, when the exchange rate for British pounds is $1.55. The book values of Sta's assets and liabilities are equal to fair values on this date, except for land that has a fair value of £200,000 and equipment with a fair value of £100,000.

Summarized balance sheet information for Pai in U.S. dollars and for Sta in pounds just before the business combination is as follows:

REQUIRED:
Prepare a consolidated balance sheet for Pai and Subsidiary at January 1, 2016, immediately after the business combination.

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Pai Sta Current assets Land Buildings-net Equipment-net $3,000,000£100,000 100,000 250,000 50,000 £500,000 £50,000 150,000 200,000 100,000 £500,000 800,000 1,200,000 1,000,000 $6,000,000 $600,000 1,000,000 3,000,000 1,400,000 $6,000,000 Current liabilities Notes payable Capital stock Retained earnings