Entity P acquired 100% of the shares of Entity S on 1 January Year 1, when S had equity share capital of $500,000 and retained earnings of $200,000. The summarised statement of financial position of S at 31 December Year 1 is shown below.

Statement of financial position at 31 December Year 1

Non-current assets:

Property, plant and equipment $1,200,000

Current assets $300,000

Equity

Ordinary shares $ 500,000

Retained earnings $ 300,000

Non-current liabilities: loan $ 500,000

Current liabilities $ 200,000

At 1 January- Year 1 the fair values of S' property, plant and equipment exceeded their book value by $200,000. They had a remaining useful life of 5 years at this date.

The long-term loan of $500,000 is repayable on 31 December Year 5. The loan is interest-free, but the interest rate on a similar borrowing would be 10%.

The book values (carrying amounts) of the other assets and liabilities of S were approximately equal to their fair values at 1 January Year 1.

Required

Calculate the net assets of the subsidiary at the end of the subsequent reporting period.