The balance sheets of X Ltd. and Y Ltd. on December 30, Year 7, are as follows:

On December 31, Year 7, X issued 150 common shares for all 60 outstanding common shares of Y. The fair value of each of Y€™s common shares was $40 on this date.
Required:
(a) Explain why this share issue most likely occurred.
(b) Prepare the consolidated balance sheet of X Ltd. on December 31, Year 7.

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X Ltd Y Ltd Book value Fair value Book value Fair value Current assets Non-current assets $300 1,500 $1,800 $300 1,700 $1,000 2,700 $3,700 $ 900 800 $1,000 2,800 900 800 Current liabilities Long-term debt Common shares-100 issued Common shares-60 issued Retained earnings $400 300 400 400 300 700 $1,800 600 1,400 $3,700