A parent company acquired $70\%$ of the stock of sub company on January $1,2001,$ for $$1,278,550.$ On this date, the balance of the subsidiary stockholder equity accounts were common stock, $$910,000,$ And retained earnings, $$98,000.$ On January $1,2001,$ the fair value of the $30\%$ of shares not purchased by the parent was $$541,450.$ On January $2001,$ the subsidiaries recorded book values were equal to fair values for all items except for two: $(1)$ Property, plant, and equipment, net had a book value of $$2,800,000$ and fair value of $$3,045,000,$ and $(2)$ parents had a book value of $$420,000$ and fair value of $$630,000.$ On the acquisition date, the subsidiary's property, plant, and equipment, net had a remaining Useful life of $10$ years, and the parents had a remaining useful life of $6$ years. On December $31,2003,$ the parents sold a building to the subsidiary for $$630,000.$ On this date the building was carried on the subsidiary's books $($net of accumulated depreciation$)$ at $$420,000.$ Both companies estimated that the building has a remaining life of $5$ years on the intercompnay sale date, with no salvage value. Each company routinely sells merchandise to the other company, with a peofit margin of $25\%$ of selling price $($regardless of the direction of the sale$).$ During $2005$ intercompany sales amount to $$210,000$ of which $$140,000$ of merchandise remains in the ending inventory of the subsidiary. On December $31,2005,$ $$70,000$ of these intercompany sales remained unpaid. Additionally the parent's December $31,2004,$ inventory includes $$105,000$ of merchandise purchased in the preceding year from the subsidiary. During $2004$ intercompany sales amount to $$175,000$ and on December $31,2004,$ $$84,000$ of these intercompany sales remained unpaid.

The parent accounts for its Equity Investment is the subsidiary using cost method. Unconfirmed profits are allocated pro$-$rata.

The pre$-$consolidation financial statements for the two companies for tbe year ended December $31,2005,$ are provided below: