Question - On January 1, year 1, ABC Corp. purchased all of DEF Corp.'s common stock for $1,000,000. On that date, the fair values of DEF's assets and liabilities equaled their carrying amounts of $800,000 and $100,000, respectively. During year 1, DEF paid cash dividends of $20,000.Selected information from the separate balance sheets and income statements of ABC and DEF as of December 31, year 1, and for the year then ended follows:
ABC DEF
Balance sheet accounts
Investment in subsidiary $800,000
Retained earnings 1,000,000 500,000
Total stockholders' equity 3,000,000 1,500,000
Income statement accounts
Operating income 400,000 300,000
Equity in earnings of ABC 150,000
Net income 450,000 150,000
In ABC's December 31, year 1 consolidated balance sheet, what amount should be reported as total retained earnings?