45. A parent company acquires its subsidiary by exchanging 50,000 shares of its Common Stock, with a fair value on the acquisition date of $24 per share, for all of the outstanding voting shares of the investee.

a. What is the total fair value of the subsidiary on the acquisition date?

b. Prepare the consolidation entry or entries on the date of acquisition given the following balance sheets of the parent and subsidiary on the date of acquisition.

Balance Sheet Parent Subsidiary

Assets

Cash........................................................ 480,000 271,200

Accounts receivable............................................ 1,500,000 417,600

Inventory .................................................... 2,300,000 536,400

Equity investment.............................................. 1,200,000

Property, plant and equipment (PPE), net.............. 11,150,000 992,400

$16,630,000 $2,217,600

Liabilities and stockholders equity

Accounts payable.............................................. 750,000 152,400

Accrued liabilities .............................................. 880,000 265,200

Long-term liabilities............................................ 3,500,000 600,000

Common stock................................................ 1,600,000 120,000

APIC........................................................ 3,800,000 150,000

Retained earnings ............................................. 6,100,000 930,000

$16,630,000 $2,217,600

c. Prepare the consolidated balance sheet on the date of acquisition.