On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Company's stock at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of Skate's book value. The balance sheets for Pond and Skate at January 1, 20X8, and December 31, 20X8, and Income statements for 20X8 were reported as follows: 20X8 Balance Sheets Pond Corporation January 1 December 31 Skate Company January 1 December 31 Assets Cash $ 65,600 $ 61,100 $13,000 $ 55,000 Accounts Receivable 134,000 180,000 63,000 68,000 Interest & Other Receivables 49,000 54,000 14,000 16,000 Inventory 112,000 152,000 50,000 50,000 Land 70,000 70,000 31,000 31,000 Buildings & 404,000 404,000 252,000 252,000 Equipment Accumulated (131,000) (166,000) (55,000) (79,000) Depreciation Investment in Skate Company: Stock 137,670 154,620 Bonds 40,000 39,600 Investment in Tin 134,000 133,000 Co. Bonds Total Assets $1,015,270 $1,082,320 $368,000 $393,000 Liabilities & Equities Accounts Payable $ 169,770 $ 89,000 $91,000 $ 39,500 Interest & Other 36,000 41,000 6,000 11,000 Payables Bonds Payable 293,000 293,000 93,000 93,000 Bond Discount (4,000) (3,500) Common Stock 145,000 145,000 23,000 23,000 Additional Paid-In Capital 150,000 150,000 19,000 19,000 Retained Earnings 221,500 364,320 140,000 211,000 Total Liabilities & $1,015,270 $1,082,320 $368,000 $393,000 Equities 20X8 Income Statements Pond Corporation Sales $465,000 Skate Company $265,000 Income from Skate Co. 62,220 Interest Income 25,500 Total Revenue $552,720 $265,000 Cost of Goods Sold $276,000 $117,000 Other Operating Expenses 45,000 35,000 Depreciation Expense 30,000 19,000 Interest Expense 19,000 5,500 Miscellaneous Expenses $ 11,900 Net Income $381,900 $170,820 $ 9,500 $186,000 $ 79,000 Additional Information 1. Pond sold a building to Skate for $82,000 on December 31, 20X7. Pond had purchased the building for $142,000 and was depreciating it on a straight-line basis over 25 years. At the time of sale, Pond reported accumulated depreciation of $85,200 and a remaining life of 10 years. Assume Pond uses the fully adjusted equity method. 2. On July 1, 20X6, Skate sold land that it had purchased for $24,000 to Pond for $37,000. Pond is planning to build a new warehouse on the property prior to the end of 20x9. 3. Skate Issued $93,000, par value 10-year bonds with a coupon rate of 10 percent on January 1, 20X5, at $88,000. On December 31, 20X7, Pond purchased $37,200 par value of Skate's bonds for $40,000. Both companies amortize bond premiums and discounts on a straight-line basis. Interest payments are made on July 1 and January 1. 4. Pond and Skate paid dividends of $28,000 and $8,000, respectively, in 20X8.