On January 1, 20X1, Drucker, Inc. paid $425 for all of the outstanding common stock of Mort Corp. At that time, Mort had the following balance sheet:

Mort Corp.
Balance Sheet
January 1, 20X1
Assets		Liab. and Stockholder’s Equity
Current Assets	$ 100	Liabilities	$ 250
Fixed Assets	400	Common Stock	25
		Retained Earn.	225
Total	$ 500	Total	$ 500

On the January 1, 20X1 date of acquisition, the book values of the current assets and liabilities equaled the fair market values of these items. The fixed assets, which had an estimated useful life of eight years and no salvage value, were worth $440.

Two years later, on December 31, 20X2, the companies have the following trial balances:

	Drucker, Inc.	Mort Corp.
	dr (cr)	dr (cr)
Current Assets	975	230
Fixed Assets		400
Accum. Deprec.		(100)
Investment in Sub.	485
Liabilities	(350)	(220)
Common Stock	(100)	(25)
Retained Earn.	(1,070)	(275)
Dividends Paid	250	90
Revenue	(970)	(800)
Expenses	880	700
Sub. Income	(100)
	0	0