On January 1, 2015, the Prather Company purchased 80% of Sun Incorporated's outstanding common stock for $1,360,000 cash. On that date, Sun's total fair value, including the noncontrolling interest, was assessed at $1,700,000, even though Sun's book value was only $1,200,000. Additionally, Sun's financial records indicated several items, shown below, with differences between book values and fair values.

sun's book values and fair values

Account Book Values Fair Values Land $120,000 $450,000 Building and equipment (life remaining: 10 years) $550,000 $500,000 Copyright (life remaining: 20 years) $200,000 $400,000 Notes payable (due in 8 years) $(260,000) $(240,000)

Table 2: Account Balances for Year Ending December 31, 2015

Account Prather Sun Revenues $(2,720,000) $(1,080,000) Cost of goods sold $1,400,000 $770,000 Depreciation expense $520,000 $20,000 Amortization expense $- $10,000 Interest expense $88,000 $10,000 Equity in Sun's income $(210,000) $- Net income $(922,000) $(270,000) Retained earnings, January 1, 2015 $(2,530,000) $(880,000) Net income (above) $(922,000) $(270,000) Dividends paid $520,000 $130,000 Retained earnings, December 31, 2015 $(2,932,000) $(1,020,000) Current assets $1,930,000 $1,056,000 Investment in Sun $1,466,000 $- Land $584,000 $120,000 Buildings and equipment (net) $1,754,000 $530,000 Copyright $- $190,000 Total assets $5,734,000 $1,896,000 Accounts payable $(382,000) $(296,000) Notes payable $(920,000) $(260,000) Common stock $(600,000) $(200,000) Additional paid-in capital $(900,000) $(120,000) Retained earnings (see above) $(2,932,000) $(1,020,000) Total liabilities and equities $(5,734,000) $(1,896,000)

For this business combination, use the acquisition method of accounting to determine consolidated balances.

You may use Tables 3 and 4 below as worksheets.

Table 3. Worksheet

account columnm 1 column 2

annual exccess amortization