Case Inc. acquired all the outstanding ($ 25) par common stock of Frey Inc. on December 31,

Question:

Case Inc. acquired all the outstanding $\$ 25$ par common stock of Frey Inc. on December 31, $20 \times 3$, in exchange for 40,000 shares of its $\$ 25$ par common stock. The business combination was considered to be a purchase transaction. 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 as follows:

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\section*{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 $20 \times 4$.
3. On June $15,20 \times 4$, 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' equities were:

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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.
\section*{Required}
Prepare a consolidated balance sheet workpaper for Case Inc. and its subsidiary, Frey Inc., for December 31, 20X4. A formal consolidated balance sheet is not required.

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