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On January 1, year 2, Brigg Inc. exchanged 150,000 shares of its 20 par value common stock for all of Blue Inc.'s common stock. At
On January 1, year 2, Brigg Inc. exchanged 150,000 shares of its 20 par value common stock for all of Blue Inc.'s common stock. At that date, the fair value of Brigg's common stock issued was equal to the book value of Blue's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. Brigg uses the equity method to account for its investment in Blue. Information from separate company operations follows: Brigg Blue Retained earnings12/31/Y1 3,200,000 925,000 Net incomesix months ended 6/30/Y2 800,000 275,000 Dividends paid3/25/Y2 750,000 -- What amount of retained earnings would Brigg report in the June 31, year 2 consolidated balance sheet? a. 3,525,000 b. 3,250,000 c. 4,450,000 d. 5,200,000
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