On January 1, 2017, Pepper purchased 75% of the outstanding shares of Salt for $1,275,000. At that time, Salt's assets and liabilities had the following book and fair values.

SALT LTD. January 1, 2017 Book value Fair value Cash $ 140,000 $ 140,000 Accounts receivable 350,000 350,000 Inventory 345,000 345,000 Capital assets M 1.07045!!! 54m W Accounts payable $ 255,000 $ 255,000 Common shares 300,000 Retained earnings 1.280,!!!11 5413354310 Capital assets have a 10 year remaining life. Balance Sheets December 31, 2017 PEPPER SALT Cash $ 90,000 $ 160,000 Accounts receivable 350,000 410,000 TRU Open Learning Assignment 2 Inventory 420,000 564,000 Capital assets 2,075,000 950,000 Investment in Salt 1 275 000 5 4210.100 2 084 0 Accounts payable $ 55,000 $ 377,000 Deferred income taxes 75,000 60,000 Long-term debt 900,000 Common shares 600,000 300,000 Retained earnings 2.58041!!! 1.34741!!! W 2034 0 Statements of Income and Retained Earnings Year ended December 31, 2017 Sales Cost of goods sold Other expenses Interest on long-term debt Depreciation Other income Net income before tax Income tax Net income after tax Retained earnings, January 1, 2017 Dividends declared Retained earnings, December 31, 2017 $ 3,750,000 2 500 000 1 250 000 755,000 90,000 70,000 M M 395,000 124 500 270,500 2,459,500 (150,000) 5 2,530,000 $ 980,000 392 000 588 000 328,000 50,000 378 210,000 63 000 147,000 1,280,000 180,000) 1 47 000