On 1/1/Y1, Phothiraj, Inc., paid \$744,ooo for 60% of Sousa's total outstanding common stock when Sousa's book value on 1/1/Y1 consisted of common stock of $200,000 and retained earnings of $440,000. The 1/1/Y1 fair value of the 40% noncontrolling interest was $496,000. Sousa held patents (a 10-year remaining life) undervalued in Sousa's books by $140,000 and an unrecorded customer list (15-year remaining life) at a $90,000 fair value. Accounting under the equity method for this combination and no goodwill impairment has occurred. The individual financial statements for these two companies as of 12/31/Y2 : Intra-entity inventory sales between the two companies have been made as follows: On 1/1/Y1, Phothiraj, Inc., paid \$744,ooo for 60% of Sousa's total outstanding common stock when Sousa's book value on 1/1/Y1 consisted of common stock of $200,000 and retained earnings of $440,000. The 1/1/Y1 fair value of the 40% noncontrolling interest was $496,000. Sousa held patents (a 10-year remaining life) undervalued in Sousa's books by $140,000 and an unrecorded customer list (15-year remaining life) at a $90,000 fair value. Accounting under the equity method for this combination and no goodwill impairment has occurred. The individual financial statements for these two companies as of 12/31/Y2 : Intra-entity inventory sales between the two companies have been made as follows