Parent company purchased 100 percent of subsidiary corporation's stock on january 1, x1, for $300,000 cash. At date of acquisition, subsidiary's share capital and RE amounted to $50,000 and $10,000 respectively.

Summarized statements of financial position of the companies on Dec 31,x3, are presented below

Assets	Parent	Subsidiary
Cash	100,000	25,000
Investments	300,000
Other assets	165,000	125,000
Total assets	$575,000	$150,000
Liabilities and equity	Parent	Subsidiary
Current liabilities	25,000	35,000
Share capital	150,000	50,000
Retained earnings	400,000	65,000
Total liabilities and equity	$575,000	$150,000

• Fair values of subsidiary were equal to book values except for buildings, which had a fair value of $100,000 in excess of net book value (remaining useful life of 20 years). Goodwill has not been impaired since acquisition
• No dividends were declared in X3
• Profit for the year X3 for parent and subsidiary amounts to $90,000 and $35,000 respectively
• During X3, $50,000 of the subsidiary's sales were to the parent. Of these sales, $10,000 remained in the December 31, X3, inventories of the parent. The december 31, X2, inventories of parent contained $5,000 of merchandise purchased from subsidiary. Subsidiary's sales are priced to provide it with a gross profit of 10% (gross profit on sales)

Contnniue the case of the parent company in the subsequent year (X4). assume that there are no intercompnay transactions, nmo dividends, and no goodwill impairment in X4. profits for X4 were $200,000 (parents) and $100,000 (subsiadiary). What amount would parents report as retained earnings in its consolidated F/S for X4?

the correct answer is $735,000 how do I calculate to get the correct answer?