Exercise CFS$\_2-$ Consolidation at acquisition date

This exercise assumes the existence of a business group consisting of only two companies one of which is wholly

owned by the other. The purchase of the holdings from the original shareholders took place in full today, December

$31,200,$ a date that also coincides with the first consolidation process.

One of the results of that process is the following balance sheet:

Of the subsidiary company, the following balance sheet information is known $($again referring to December $31,$

$20$X$0)$:

Subsidiary $($fair values of the identifiable net assets$)$

Required:

Using the information provided so far

Build up the balance sheet of the parent company.

Provide the journal entries related to the consolidation process concerning

a$.$ The recognition of the higher or lower values of the individually identifiable net assets of

the subsidiary

b$.$ The elimination of the investment in the investee