The balance sheets of Petron Co. and Seeview Co. on June 29, Year 2, were as follows:

On June 30, Year 2, Petron Co. purchased 90% of the outstanding shares of Seeview Co. for $40,500 cash. Legal fees involved with the acquisition were an additional $1,000. These two transactions were the only transaction on this date. The carrying amounts of Seeview's net assets were equal to fair value except for the following:
Fair value
Inventory ........ $8,750
Plant assets ...... 67,500
Intangible assets ..... 7,500
Long-term debt ...... 32,500
Seeview has a five-year agreement to supply goods to Bardier. Both Petron and Seeview believe that Bardier will renew the agreement at the end of the current contract. The agreement is between Seeview and Bardier; it cannot be transferred to another company without Seeview's consent. Seeview does not report any value with respect to this contract on its balance sheet. However, an independent appraiser feels that this contract is worth $10,000.
Required:
(a) Assume that Petron Co. is a public entity. Prepare the consolidated balance sheet of Petron Co. on June 30, Year 2.
(b) Assume that Petron is a private entity, uses ASPE, and chooses to use the equity method to account for its investment in Seeview. Prepare Petron's June 30, Year 2, separate-entity balance sheet after the business combination.

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Petron Seeview Cash and receivables Inventory Plant assets (net) Intangible assets 80,000 47,500 190,000 20,000 S337,500 $16,250 7,500 58,750 5,000 $87,500 Current liabilities Long-term debt Common shares Retained earnings (deficit) $ 52,500 81,250 127,500 76,250 $337,500 $25,000 37,500 38,750 (13,750) $87,500