Aparent company exchanges 12,000 shares of its $2 par value common stock, with a fair value of

$9/share, for all of the shares owned by the subsidiary's shareholders. On the acquisition date, the sub-

sidiary reported $30,000 of contributed capital (i.e., common stock) and $45,000 of Retained Earnings.

An examination of the subsidiary's balance sheet revealed that book values were equal to fair values for

all assets except for PPE (net), which has a book value of $40,000 and a fair value of $73,000.

a.Prepare the entry that the parent makes to record the investment.

b.Prepare the[E]and[A]consolidation entries