On January 1, Year 1, Shannon Corporation (SC) acquired 70 percent (70,000 shares of $2 par common stock) of Kanada Corporation (KC) for $30 per share. Shortly after the acquisition the remaining KC shares had a fair value of $28 share. At the time of the acquisition KC had a book value of $2,000,000 and had only one specific asset whose fair value differed from its book value. Customer Lists with a useful life of 5 years had a book value of $0 and a fair value of $300,000. Kanada sold Shannon inventory costing $140,000 for $200,000 during Year 4. At December 31, Year 4, 30 percent was still in SCs inventory. KC sold SC inventory costing $270,000 for $400,000 in Year 5. As of December 31, Year 5, 20 percent of that was still in SCs inventory. On 1/1/Year 2 SC sold equipment to KC for $400,000. The equipment had an original purchase price of $600,000 and a book value of $250,000 . KC plans to depreciate the equipment over the next 10 years using the straight-line method with no salvage value. On 1/1/Year 4 SC sold land to KC for $200,000 that had a book value of $150,000. KC has made no payments on the land but plans to pay off the debt on April 1, Year 6.