Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 80,000 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. 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 is undervalued by $400,000, an unrecorded License Agreement with a fair value of $200,000, and an unrecorded Customer List owned by the subsidiary with a fair value of $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? (see table numbered 1-7 to answer)

Balance Sheet	Parent	Subsidiary
Assets
Cash	$700,000	$200,000
Accounts receivable	300,000	400,000
Inventory	450,000	500,000
Equity investment	1,920,000
Property, plant and equipment (PPE), net	1,500,000	900,000
	$4,870,000	$2,000,000
Liabilities and stockholders equity
Accounts payable	$150,000	$100,000
Accrued liabilities	180,000	200,000
Long-term liabilities	1,000,000	550,000
Common stock	140,000	100,000
APIC	2,000,000	150,000
Retained earnings	1,400,000	900,000
	$4,870,000	$2,000,000

1.	Accounts Receivable	Answer
2.	Equity Investment	Answer
3.	PPE, net	Answer
4.	Goodwill	Answer
5.	Common Stock	Answer
6.	APIC	Answer
7.	Retained Earnings	Answer

b. What intangible assets will be reported on the consolidated balance sheet and at what amounts?

License Agreement	Answer
Customer List	Answer
Goodwill	Answer