Chapter 2, Problem 19P

Problems 19 and 20 are based on the following information. The separate condensed balance sheets of Patrick Corporation and its wholly owned subsidiary, Sean Corporation, are as follows:

BALANCE SHEETS December 31, 2017
	Patrick	Sean
Cash	$ 80,000	$ 60,000
Accounts receivable (net)	140,000	25,000
Inventories	90,000	50,000
Plant and equipment (net)	625,000	280,000
Investment in Sean	460,000
Total assets	$1,395,000	$415,000
Accounts payable	$ 160,000	$ 95,000
Long-term debt	110,000	30,000
Common stock ($10 par)	340,000	50,000
Additional paid-in capital		10,000
Retained earnings	785,000	230,000
Total liabilities and shareholders’ equity	$ 1,395,000	$415,000

  Additional Information:

• On December 31, 2017, Patrick acquired 100 percent of Sean’s voting stock in exchange for $460,000.
• At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $25,000 more than their carrying amounts.

  19.    In the December 31, 2017, consolidated balance sheet of Patrick and its subsidiary, what amount of total assets should be reported?

1. a. $1,375,000
2. b. $1,395,000
3. c. $1,520,000
4. d. $1,980,000