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On 12/31/Year 1, Passey Co. acquired a 100% interest in Solomon Co. by exchanging 10,000 shares of its common stock for 100,000 shares of Solomon’s common stock. The fair market value of Passey’s common stock on December 31, Year 1, was $9 per share, and the fair value of Solomon’s was $3.50 per share.
Additional information as of December 31, Year 1, is as follows:
Solomon Co.
Book Values
Fair Values
Current assets
$115,000
$115,000
Plant assets
200,000
255,000
Liabilities
10,000
10,000
Passey Co.
Plant assets
$1,700,000
$1,800,000
Passey’s consolidated financial statements as of December 31, Year 1, would report plant assets at:
(Points : 10)
$1,700,000
$1,800,000
$1,955,000
$2,055,000