On January 1, 20X5, P acquired 80% of S for $400,000. On the date of acquisition, S had the following balance sheet S Company Balance Sheet January 1, 20x5 Assets Liabilities and Stockholders' Equity Cash Accounts Receivable Inventory Land Buildings Acc. Dep'n-Bldg Equipment Acc. Dep'n-Equip Goodwill Total 40,000 Accounts Payable 50,000 Bonds Payable 20,000 Common Stock $1 par 150,000 Paid in Capital 150,000 Retained Earnings 100,000 200,000 20,000 80,000 50,000 (100,000) 150,000 (50,000) 40,000 450,000 Total $450,000 On the date of acquisition, the fair market values of the following net assets differed from their book values Fair Market Item Inventory Land Buildings Equipment Bonds Payable Value $40,000 190,000 200,000 70,000 190,000 Additional Information Sold at the end of X1 20-year remaining life 10-year remaining life 5-year remaining life Any remaining excess is attributable to goodwill On January 1, 20X8, S held merchandise sold to it from P for $50,000. The beginning inventory had an applicable gross profit of 20%. During 20X8 P sold merchandise to S for $100,000. On December 31, 20X8, S held $30,000 of the merchandise in its inventory. The ending inventory had an applicable gross profit of 25%. S wrote down to $28,000 the merchandise purchased from P and remaining in its 20X8 ending inventory On January 1, 20X5, P acquired 80% of S for $400,000. On the date of acquisition, S had the following balance sheet S Company Balance Sheet January 1, 20x5 Assets Liabilities and Stockholders' Equity Cash Accounts Receivable Inventory Land Buildings Acc. Dep'n-Bldg Equipment Acc. Dep'n-Equip Goodwill Total 40,000 Accounts Payable 50,000 Bonds Payable 20,000 Common Stock $1 par 150,000 Paid in Capital 150,000 Retained Earnings 100,000 200,000 20,000 80,000 50,000 (100,000) 150,000 (50,000) 40,000 450,000 Total $450,000 On the date of acquisition, the fair market values of the following net assets differed from their book values Fair Market Item Inventory Land Buildings Equipment Bonds Payable Value $40,000 190,000 200,000 70,000 190,000 Additional Information Sold at the end of X1 20-year remaining life 10-year remaining life 5-year remaining life Any remaining excess is attributable to goodwill On January 1, 20X8, S held merchandise sold to it from P for $50,000. The beginning inventory had an applicable gross profit of 20%. During 20X8 P sold merchandise to S for $100,000. On December 31, 20X8, S held $30,000 of the merchandise in its inventory. The ending inventory had an applicable gross profit of 25%. S wrote down to $28,000 the merchandise purchased from P and remaining in its 20X8 ending inventory