Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2018 (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2014, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $26 per share Michael Company 12/31/18 Aaron Company 12/31/18 Revenues Cost of goods sold Amortization expense Dividend income (727,000) 328,500 119,700 (427,500) 168,750 119,500 5,000) Net income (283,800) (139,250) Retained earnings, 1/1/18 Net income (above) Dividends declared $ (902,000) (601,000) (139,250) (283,800) 90,000 5,000 (1,095, 800) $ 144,000 (735,250) 15,200 302,000 360,000 Retained earnings, 12/31/18 Cash Receivables Inventory Investment in Aaron Company Copyrights Royalty agreements 422,000 583, 000 510,000 479,000 951,000 432,000 388,000 Total assets 3,089,000 1,497,200 (893,200) 300,000) (500,000) (300,000) (1,095, 800) (3,089,000) (631,950) Liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31/18 (100,000) (30,000) (735,250) (1,497,200) Total liabilities and equity On the date of acquisition, Aaron reported retained earnings of $270,000 and a total book value of $400,000. At that time, its royalty agreements were undervalued by $60,000. This intangible was assumed to have a six-year remaining life with no residual value Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books Aaron declared and paid dividends in the same period