On January 1^st. 2021, X Company paid $656,000 in cash to acquire 80% of the common shares of the Y Company.

Below are the balance sheets of the X Company and Y Company at December 31^st. 2020.

X…………………………………………………….y

Cash……………………………………………………………$748,000…………………………………………..$ 20,800

Accounts receivable…………………………………… 168,000………………………………………….. 52,800

Inventory…………………………………………………… 200,000…………………………………………. 138,400

Goodwill……………………………………………………….. 400,000…………………………………………. 0

Plant assets……………………………………………….. 1,028,000………………………………………….. 330,400

Patents……………………………………………………….. 208,000……………………………………………….52,800

TOTAL ASSETS………………………………………….$2,752,000………………………………………… 595,200

Current liabilities………………………………………… 328,000…………………………………………… 72,000

Long-term debt………………………………………….. 920,000……………………………………………. 132,000

Common shares………………………………………….. 712,000……………………………………………. 200,000

Retained earnings……………………………………….. 792,000……………………………………………..191,200

TOTAL LIABILITIES &OWNERS’ EQUITY…… ….$2,752,000……………………………………………595,200

Additional Information:-

1. The fair values of Y’s identifiable net assets on this date were as follows:-

Cash………………………………………………………$20,800

Accounts receivable………………………………. 44,000

Inventory………………………………………………. 178,000

Plant…………………………………………………… 392,000

Trademarks…………………………………………… 68,000

Patents………………………………………………….. 124,000

Current liabilities………………………………….. 72,000

Long-term debt……………………………………. 148,000

2. In addition to the above assets, Y owned a number of unique . internet domain names .

These can be sold separately for an estimated amount $108,000.

3. On January 1^st. 2021, X Company paid the following fees for assistance in completing the purchase:-

Accounting fees…………………………$30,000

Legal fees……………………………………. 20,000

Required:-

1. Complete the consolidated balance sheet at January 1^st. 2021(24 marks).
2. Assume that X is a private entity, using ASPE, and chooses to use the cost method to account for its investment in Y, prepare X’s separate-entity balance sheet on January 1^st,2021 (6 marks).
3. Prepare working paper eliminating entries at the date of acquisition(6 marks)

(CLEARLY SHOW ALL YOUR WORKING PAPERS. MARKS ARE ALLOCATED FOR WORKING PAPERS)