Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 55,000 shares of its Common Stock, with a market value on the acquisition date of $40 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiarys assets and liabilities at an amount equaling their book values except for a building that it feels is undervalued by $500,000, an unrecorded License Agreement that the parent values at $250,000, and an unrecorded Customer List owned by the subsidiary that the parent values at $100,000. Any further discrepancy between the purchase price and the book value of the subsidiarys Stockholders Equity is attributed to expected synergies to be realized by the consolidated company as a result of the acquisition

a. Given the following acquisition-date balance sheets of the parent and subsidiary, at what amounts will each of the following be reported on the consolidated balance sheet?

Parent Subsidiary

Assets

Cash

$910,500

$201,600

Accounts receivable

384,000

417,600

Inventory

582,000

536,400

Equity investment

2,200,000

Property, plant and equipment (PPE), net

2,799,600

992,400

$6,876,100

$2,148,000

Liabilities and stockholders equity

Accounts payable

$188,100

$127,000

Accrued liabilities

220,800

221,000

Long-term liabilities

1,000,000

600,000

Common stock

220,000

120,000

APIC

3,740,000

150,000

Retained earnings

1,507,200

930,000

$6,876,100

$2,148,000