31. Corporation exchanged cash 100 the outstanding voting stock of Strata Corporation. On the acquisition date. Strata had the following balance sheet 375,000 Accounts payable 122,000 2,655,000 Accounts receivable Long-term debt 283,000 1,500,000 Inventory 350,000 Common stock 1,100,000 Retained earnings Buildings (net) 1,875,000 $5,630,000 Licensing agreements. $5,630,000 Pinnacle prepared the following fair-value allocation: $3,200,000 Fair value of Strata (consideration transferred) 2,600,000 Carrying amount acquired 00.000 Excess fair value $300,000 to buildings (undervalued) 200,000 (100,000) to licensing agreements (overvalued) 400,000 to goodwill (indefinite life) At the acquisition date, Strata's buildings had a 10-year remaining li and its licensing agree- ments were due to expire in At December 31, accounts payable included an S85,000 current liability owed to Pinnacle. Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pin- nacle employs the initial value method in its internal accounting for its investment in Strata. The financial statements for the two companies for the year ending December 31 separate 2015, follow. Credit balances are indicated by parentheses. Strata Pinnacle (7,000,000) $(3,000,000) Sales 1,700,000 4,650,000 Cost of goods sold. 160,000 000 Interest expense 350,000 585,000 Depreciation expense 00.000 Amortization expense 0.000 Dividend income (1,560,000) Net income