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problem: Bon Air, Inc., acquired 70% (2,800 shares) of the outstanding voting stock of Creedmoor Corporation on January 1, 2004, for dollar 250,000 cash Creedmoor's net assets on that date totaled $230,000, but this balance included three (3) accounts having fair values that differed from their book values:


Book Value

Fair Value

Land .............................................................................


mce_markernbsp; 40,000

Equipment (14-year life) ................................................



Liabilities (10-year life) .................................................





          Bon Air



mce_markernbsp;  (694,800)


Operating expenses



Investment income



Net income

 mce_markernbsp; (109,000)

 mce_markernbsp; (70,000)

Retained earnings, 1/1/07

mce_markernbsp;  (760,000)


Net income



Dividends paid



Retained earnings, 12/31/07

 mce_markernbsp; (801,000)


Current assets

mce_markernbsp;   72,000

mce_markernbsp; 120,000

Investment in Creedmoor Corp






Buildings (net)



Equipment (net)



Total assets

 $ 1,089,000

 mce_markernbsp; 410,000


mce_markernbsp;  (180,000)

mce_markernbsp;   (50,000)

Common stock



Additional paid-in capital



Retained earnings, 12/31/07



Total liabilities and equities



Consolidated financial statements are being prepared on December 31, 2007. What balance should be reported for each of the following accounts?

Operating Expenses

No controlling Interest in Creedmoor's Net Income


Retained Earnings, 1/1/07



Common Stock

Net Income

Dividends Paid


Retained Earnings, 12/31/07

No controlling Interest in Creedmoor, 12/31/07

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