On January 1, 2012, Pickle Corporation exchanged $3,200,000 cash for 100 percent of the outstanding voting stock of Sausage Corporation. Pickle plans to maintain Sausage as a wholly owned subsidiary with separate legal status and accounting information systems.At the acquisition date, Pickle prepared the following fair-value allocation schedule:Fair value of Sausage (consideration transferred) 3,608,000 Book value of net assets acquired 2,965,000 Excess of cost over fair value 643,000 to buildings (undervalued) 266,000 to licensing agreements (overvalued) (97,000)net 169,000  to goodwill (indefinite life)   474,000   

On the acquisition date, Sausage had the following balance sheet:

Accounts  Sausage  

Cash 159,000  

Accounts receivable  308,000  

Inventory 434,000  

Buildings (net) 2,000,000  

Licensing agreements  3,200,000  

Goodwill 0     

Total assets 6,101,000  

Accounts payable (376,000)  

Long-term debt  (2,760,000)  

Common stock (1,500,000)  

Retained earnings (1,465,000)

Total liabilities and equities. (6,101,000)

At the acquisition date, Sausage's buildings had a 10-year remaining life and its licensing agreements were due to expire in 5 years. Sausage Corporation continues its separate legal existence as a wholly owned subsidiary of Pickle with independent accounting records. Pickle employs the cost method in its internal accounting for its investment in Sasuage.

The separate financial statements for the two companies for the year ending 31 December 2013.