Father, Inc., buys 80 percent of the outstanding common stock of Sam Corporation on January 1, 2011, for \($680,000\) cash. At the acquisition date, Sam’s total fair value was assessed at \($850,000\) although Sam’s book value was only \($600,000\). Also, several individual items on Sam’s financial records had fair values that differed from their book values as follows:

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Land Buildings and equipment (10-year remaining life) Copyright (20-year life) Notes payable (due in 8 years). Book Value Fair Value $ 60,000 $225,000 275,000 250,000 100,000 200,000 (130,000) (120,000) For internal reporting purposes, Father, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2011, for both companies. Using the acquisition method, determine consolidated balances for this business combination (through either individual computations or the use of a worksheet). Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sam Net income Father $(1,360,000) 700,000 Sam $(540,000) 385,000 260,000 10,000 -0- 5,000 44,000 5,000 (105,000) -0- $ (461,000) $(135,000)