Consolidation at date of acquisition (purchase price equals book value)

59. Consolidation at date of acquisition (purchase price equals book value) A parent company acquires its subsidiary by exchanging 30,000 shares of its Common Stock, with a fair value on the acquisition date of $20 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.......... ...... $ 200,000 $100,000 Accounts receivable........ 300,000 200,000 Inventory 500,000 400,000 Equity investment. 600,000 Property, plant and equipment (PPE), net.. 1,000,000 600,000 $2,600,000 $1,300,000 Liabilities and stockholders' equity Accounts payable...... ...... $ 100,000 $100,000 iabilities ................................................ 200,000 200,000 Long-term liabilities ..... 800,000 400,000 Common stock ........ 300,000 120,000 APIC.......................................................... 500,000 180,000 Retained earnings ................................... 700,000 300,000 $2,600,000 $1,300,000 Activate Windows c. Prepare the consolidated balance sheet on the date of acquisition. Go to Settings to activate Windows