1.Parent Corp ltd acquires all of Subsidiary Corp ltd. outstanding common Stock for $ 300,000 in 2016, equal with the fair value of Subsidiary Corp ltd as a whole. Fair Value of Subsidiary Corp ltd individual assets and liabilities are equal with its book value. The balance sheets show that the total book value of the share acquired equals the total stakeholders equity of Subsidiary Corp ltd ($200,000+$100,000). Pass the necessary journal entries and prepare the consolidated balance sheet after necessary eliminations. [4 marks]

	Parent Corp ltd	Subsidiary Corp ltd
Assets
Cash	50,000	50,000
Accounts Receivable	75,000	50,000
Inventory	100,000	60,000
Land	175,000	40,000
Building and Equipment	800,000	600,000
Accumulated Depreciation	(400,000)	(300,000)
Investment in Subsidiary Corp Ltd	300,000
Total Assets	1,100,000	500,000
Liabilities and Stockholders Equity
Accounts Payable	100,000	100,000
Bonds Payable	200,000	100,000
Common Stock	500,000	200,000
Retained earnings	300,000	100,000
Total Liabilities and Equity	1,100,000	500,000

2. ABC Company purchased 35 percent ownership of XYZ Company on January 1, 2009, for $140,000. XYZ reported 2009 net income of 80,000 and paid dividends of $20,000.At December 31^st, 2009ABC determined the fair value of its investment in XYZ to be $174,000.

Required:

Give all journal entries recorded by ABC with respect to its investments in XYZ in 2009 assuming it uses

The Equity method. [1.5 marks]

The Fair value method. [1.5 marks]