On January 1, 2008, P Company purchased 60% of the common stock of S Company for $231,200 when the retained earnings of S Company were $100,000. P Company uses the cost method to record its investment in S Company and measure non-controlling interest as the fair value of the subsidiary’s shares held by non-controlling interest. Assume that both companies have a tax rate of 20% and S Company’s book value of all accounts is equal to their tax bases. The market value of S Company’s shares held by non-controlling interest is $35 per share on the acquisition date. On the acquisition date, the book values of all assets and liabilities of S Company were equal to their fair values except the following items:

Fair Value in Excess of Book Value
Inventory $2,000
Building $8,000
Land $10,000

Inventory was sold in 2008. The remaining useful life of the building on the acquisition date is 8 years. Both companies use the straight-line method in the calculation of depreciation expenses. A goodwill impairment loss of 10 percent annually is applied, if any.