Question
On january 1,year 2,ABC Corp.exchange 100,000 shares of its $10 par value common stock for all of DEF Corp common stock.At that date the fair
On january 1,year 2,ABC Corp.exchange 100,000 shares of its $10 par value common stock for all of DEF Corp common stock.At that date the fair value of ABC common stock issued was equal to the book value of DEF net assets.Both corporations continued to operate as separate businesses,maintaining accounting records with years ending December 31.ABC uses the equity method to account for its investment in DEF.Information from separate company operations follows:
ABC DEF
Retained earnings-12/31/Y1 2,000,000 900,000
Net income six months ended 6/30/Y2 500,000 250,000
Dividends paid 3/20/Y2 250,000 -
what amount of retained earnings would ABC report in its June 30,year 2 consolidated balance sheet?
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