(Appendix B) In a prior year, Mucho Company acquired Small Company in exchange for its common stock. Small had identifiable net assets with book and fair values of $500,000 and

$800,000, respectively. Mucho issued $1,000,000 of common stock for Small Company. The acquisition occurred on October 1, 20X1. Both companies have a December 31 year-end. Mucho structured the acquisition as a pooling of interests. As compared to a purchase, how did Mucho enhance income in 20X1, and later, as a result of using the pooling method?

AppendixLO1