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Pebble Company pays $60 million in cash to acquire all of the stock of Speck Company. The balance sheets of Pebble and Speck just after

Pebble Company pays $60 million in cash to acquire all of the stock of Speck Company. The balance sheets of Pebble and Speck just after the acquisition are as follows:

(in millions)

Pebble

Speck

Current assets

$ 140

$ 40

Plant assets, net

2,000

1,200

Investment in Speck

60

--

$2,200

$1,240

Liabilities

$ 400

$1,200

Capital stock

1,700

50

Retained earnings

100

(10)

Total

$2,200

$1,240

Specks assets and liabilities are reported at amounts that approximate fair value at the date of acquisition, and there are no unreported net assets.

Required :

a. Prepare the consolidated balance sheet for Pebble and Speck at the date of acquisition.

b. Now assume Pebble reports its investment in Speck using the equity method. Present Pebbles balance sheet

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