Balance sheets for Prego Company and Sprague Company as of December 31, 2010, follow: The fair values of Sprague Company’s assets and liabilities are equal to their book values. Required: Prepare a consolidated balance sheet as of January 1, 2011, under each of the following assumptions: A. On January 1, 2011, Prego Company purchased 90% of the outstanding common stock of Sprague Company for $594,000. B. On January 1, 2011, Prego Company exchanged 11,880 of its $20 par value common shares with a fair value of $50 per share for 90% of the outstanding common shares of Sprague Company. The transaction is apurchase.
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