Question 1 (50 points). Flower Company was established on January 1, 2015. Along with other assets, it immediately purchased land for $150,000, and a building $180,000. On January 1, 2020, Flower transferred these assets, cash of $25,000, and inventory costing $40,000 to a newly created subsidiary, Sparrow Company, in exchange for 25,000 shares of Sparrow's $4 par value stock. Flower uses straight line depreciation and useful life of 30 years for the building, with no estimated residual values. Required: a. Give the journal entry that Flower recorded for the transfer of assets and liabilities to Sparrow (25 points). b. Give the journal entry that Sparrow recorded for the receipt of assets and liabilities from Flower (25 points). Question 2 (50 points). On January 1, 2020, Pigeon Corporation acquired Snake Corporation's net assets by paying 245,000 cash. Balance sheet data for the Pigeon & Snake and fair value information for Snake immediately before the business combination are given below: Pigeon Snake ASSETS Book Value Book Value Fair Value Cash 325,000 80,000 80,000 Notes receivable 115,000 53,500 53,500 Inventory 95,000 72,500 77,500 Plant, Property and Equipment 375,000 275,000 225,000 Less: Accumulated Depreciation -140,000 -85,000 Total Assets 770,000 396,000 436,000 LIABILITIES & STOCKHOLDERS' EQUITY Accounts Payable 155,000 82,000 82,000 Notes Payable 230,000 97,000 97,000 Bonds payable 100,000 35,000 35,000 Common Stock 30,000 40,000 Additional Paid-in Capital 120,000 55,000 Retained Earnings 135,000 87,000 Total Liabilities and Equities (770,000 C 396,000 Required: a. Prepare the journal entry to record the acquisition of Snake Corporation. b. What would the balance of inventory be in the balanced sheet of combined company immediately after the combination? c. What would the balance of Common stock be in the balanced sheet of combined company immediately after the combination