2. On January 1, 2019, P Corporation paid $1,090,000 for all of the outstanding voting stock of S Inc. At the date of acquisition, S had a book value equal to $950,000. S's individual assets and liabilities had fair values equal to their book values except for the patent account, which was undervalued by $40,000 with an estimated remaining life of eight years. On December 31, 2019 each company submitted the following financial statements for consolidation. Income Statement P Corp. S Inc. Revenues Cost of goods sold Other Rev. & Gains Depreciation Equity earnings from S 535,000 (210,000) 100,000 (125,000) 200,000 495,000 (155.000) 0 (140,000) 0 Net Income 500,000 200,000 Statement of Ret. Earnings Retained Earnings, 1/1 Net Income (above) Dividends paid 1,500,000 500,000 (200,000) 650,000 200,000 (50,000) Retained Earnings, 31/12 1,800,000 800,000 Balance Sheet Current Assets Investment in S Trademarks Patent Equipment 190,000 1,300,000 100,000 300,000 610,000 300,000 0 200,000 400,000 300,000 Total assets 2,500,000 1,200,000 Liabilities Common stock Retained earnings, 31/12 165,000 535,000 1,800,000 100,000 300,000 800,000 Total liabilities and equity 2,500,000 1,200,000 Prepare necessary journal entries and consolidated worksheet using equity method. 2. On January 1, 2019, P Corporation paid $1,090,000 for all of the outstanding voting stock of S Inc. At the date of acquisition, S had a book value equal to $950,000. S's individual assets and liabilities had fair values equal to their book values except for the patent account, which was undervalued by $40,000 with an estimated remaining life of eight years. On December 31, 2019 each company submitted the following financial statements for consolidation. Income Statement P Corp. S Inc. Revenues Cost of goods sold Other Rev. & Gains Depreciation Equity earnings from S 535,000 (210,000) 100,000 (125,000) 200,000 495,000 (155.000) 0 (140,000) 0 Net Income 500,000 200,000 Statement of Ret. Earnings Retained Earnings, 1/1 Net Income (above) Dividends paid 1,500,000 500,000 (200,000) 650,000 200,000 (50,000) Retained Earnings, 31/12 1,800,000 800,000 Balance Sheet Current Assets Investment in S Trademarks Patent Equipment 190,000 1,300,000 100,000 300,000 610,000 300,000 0 200,000 400,000 300,000 Total assets 2,500,000 1,200,000 Liabilities Common stock Retained earnings, 31/12 165,000 535,000 1,800,000 100,000 300,000 800,000 Total liabilities and equity 2,500,000 1,200,000 Prepare necessary journal entries and consolidated worksheet using equity method