Problem $3-2$

$L03$

The balance sheets of Rodriguez Ltd$.$ and Vancouver Co$.$ on December $31,$ Year $2,$ just before the transaction described

below, were as follows:

CHAPTER $3$ Business Combinations

On December $31,$ Year $2,$ Rodriguez purchased $100\%$ of Vancouver's common shares for $$230,000$ in cash. Coinci$-$

dentally, the carrying amounts of Vancouver's assets and liabilities were equal to fair value.

Required

$($a$)$ Prepare the journal entries, if any, for Rodriguez Ltd$.$ and for Vancouver Co$.$ to record this transaction.

$($b$)$ Prepare balance sheets for Rodriguez Ltd$.$ and for Vancouver Co$.$ at December $31,$ Year $2,$ after recording the

transaction noted above.

$($c$)$ Prepare a consolidated balance sheet for Rodriquez Ltd$.$ after the transaction noted above.