Penguin purchased 75% of Star on January 1 2015 for The of the noncontrolling interests was 700,000. The book value of Star's equity was at the time. Penguin uses the equity method to account for its investment in Star. The excess of investment cost over book value was allocated as follows Equipment (20-year life) Customer list (10-year life) Patent (10-year life) Goodwill Total S130,ooo 184,000 147 ,ooo 139 ooo ssoo,ooo Star regularly sells merchandise to Penguin In 2017, inter-company sales amounted to $60,100, with $16,300 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $18,900. In 2018, inter-company sales amounted to $87,400 with $23,800 of deferred profit remaining in ending Inventory. Year-end inter-company receivables/payables amounted to $37,600. On January 2, 2018, Star sold equipment to Penguin for $60,000. The equipment had a cost of $80,000 and accumulated depreciation of S45,000. The remaining life of the equipment was estimated at 4 years. Financial statements of Penguin and Star for the year ended December 31 , 2018 are presented below. Sales revenue Cost of goods sold Gross profit Operating expenses Income (loss) from subsidiary Net Income Retained Earnings: 1/1/18 Net income Dividends Retained Earnings: 12/31/18 Cash and receivables Inventory Equity investment Property, plant & equipment (Net) Total Assets Accounts payable Accrued liabilities Notes payable Common stock Additional paid-in capital Retained Earnings, 12/31/18 Total Liabilities and Equities Penguin (4.003.800) (931 ,020) 240 160 (164 690) s 50 50 5 358 920 s 708,300 803,130 860,940 767 goo 4 060 670 Star Sl 833,500 (1.110.660) 722,850 (336,800) s 980,010 386,060 (42.520) Sl ,067 ,340 690,270 1 327 490 s 311,210 370,660 665,300 183,960 230,460 1 323 540