On Jan 1, 2016, PORE Inc. purchased 80% of the voting shares of SCORE Inc. for $900,000 cash, plus a commitment to pay an additional $300,000 in three years if sales grow by more than 20% over the next three years. An independent business valuator stated that PORE Inc. could have paid an extra $100,000 at the date of acquisition instead of agreeing to a potential payment of $300,000 in three years.

On the date of acquisition, SCORE's Common Stock and Retained Earnings were valued at $200,000 and $600,000 respectively.PORE uses the cost method to account for its investment.

SCORE's fair values approximated its carrying values with the following exception:

The equipment had a fair value that was $ 100,000 higher than its carrying value, and was estimated to have a remaining useful life of 10 years from the date of acquisition with no salvage value.

SCORE's inventory had a fair value that was $2,000 more than book value. SCORE sold this inventory in 2016.

SCORE had an internally developed patent that had a fair value of $20,000 and can be used for four years. SCORE did not include the value of the patent on its financial records.

Both companies use straight line amortization exclusively for all assets and liabilities if applicable.

The effective tax rate for both companies is 40%.