On January 1, 2020, Summer 20 Company acquire Towel Corp. Below are the details.

Towel Corp maintained separate incorporation and Summer 20 used the equity method to account for the investment.

Any excess of cost over book value was assigned to goodwill.

1. What is the 2020 total annual amortization of allocations? 6 points (NOTE: pay close attention to the direction of fair value book value differences.)

2. What is the equity in Sub earnings? 5 points

3. What is the Consolidated Net Income 5 points

Show and label all work for credit.

Percentage of voting common stock Summer 20 acquired						100%
Amount Summer 20 Company paid						$1,250,000
Towel Net Income 2020						$115,000
Towel paid dividends during 2020						$48,000
Summer 20 Net Income 2020 (not including Towel Corp)						$440,000
Towel Co			Book Value	Fair Value
Current Assets			$115,000	$115,000
Land			$72,000	$192,000
Building (20 year life)			$250,000	$310,000
Equipment (10 year life)			$555,000	$530,000
Current Liabilities			$34,000	$34,000
Long Term Liabilities			$120,000	$120,000
Common Stock			$228,000
Additional Pd in Capital			$384,000
Retained Earnings			$216,000