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Consolidated balance sheet

E3-8 Subsidiary Acquired for Cash
Fineline Pencil Company purchased 100 percent of Smudge Eraser Corporation's stock on January 2,20X3, for $150,000 cash. Summarized balance sheet data for the companies on December 31, 20X2, are
as follows:

Fineline Pencil Smudge Eraser
Company Corporation
Book Value Fair Value Book Value Fair Value
Cash $200,000 $200,000 $ 50,000 $ 50,000
Other Assets 400,000 650,000 120,000 180,000

Total Debits $600,000 $170,000

Current Liabilities $100,000 $100,000 $ 80,000 $ 80,000
Common Stock 300,000 50,000
Retained Earnings 200,000 40,000

Total Credits $600,000 $170,000

Required
Prepare a consolidated balance sheet immediately following the acquisition.

Solution Summary

The solution explains how to prepare a consolidated balance sheet immediately after the acquisition.

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