1. Parent Company buys Sub Company. Sub Company has the following book and fair market values for their accounts as of the purchase. Parent Company has the following book values on balance sheet right before the purchase. Parent Company pays the owners of Sub Company by issuing 70 shares of $10 par common stock, selling for $20 per share as of the business combination. Sub Company does not dissolve after this event, but remains a separate legal entity.

Balance Sheet of Sub Company				Book Values	Fair Values
Assets
Current assets				$150	$150
Property, plant, and equipment (net)				200	300
Copyright (net)				50	600
Sales contracts					350
Total Assets				$400	$1,400
Liabilities
Accounts payable				$100	$100
Stockholders' Equity
Common stock-$5 par value				50
Additional paid-in capital				50
Retained earnings				200
Total Liabilities and Stockholders' Equity				$400