On January 5, 20X1, Alpha Inc. acquired 80% of the outstanding voting shares of Beta Inc. for $2,000,000 cash. Following are the separate balance sheets for the two companies immediately after the stock purchase, as well as fair value information regarding Beta Inc.:

Required:

1. Prepare the entries for adjustments and eliminations required to prepare the consolidated balance sheet immediately after acquisition under the acquisition method.

2. Prepare the consolidated balance sheet immediately after acquisition.

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Beta Alpha Book Value Fair Value Assets $ 500,000 $ 500,000 Current assets Fixed assets, net $1,750,000 5,000,000 2,000,000 1,625,000 2,000,000 Investment in Beta Total Assets $8,750,000 $2,125,000 $2,500,000 Liabilities Current liabilities $ 250,000 $ 125,000 $ 125,000 Stockholders' Equity Common stock 7,000,000 1,500,000 Capital in excess of par Retained earnings 500,000 1,000,000 500,000 Total Stockholders' Equity 8,500,000 2,000,000 Total Liabilities and Stockholders' Equity $8,750,000 $2,125,000