On January 1, Year 4, Grant Corporation bought 12,000 (80%) of the outstanding common shares of Lee Company for $105,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $37,500 of common shares outstanding and $45,000 retained earnings. Also on that date, the carrying amount of each of Lee's identiable assets and liabilities was equal to its fair value except for the following: Camera Annual: Fair Value Inventory $?5, 000 $82, 500 Patent 15, 000 30, 000 The patent had an estimated useful life of ve years at January 1. Year 4. and the entire inventory was sold during Year 4. Grant uses the cost method to account for its investment. The following are the separateentity financial statements of Grant and Lee as at December 31, Year 7: mm SHEETS At Deceer 31, Tel: 7 Erna: Lee A555 :5 Cash 3 7, 500 3 2?. 000 Accounts receivable 277, 500 123, 000 Inventory 4:65, 000 150, 000 Investment in Lee 105, 000 Equipment. net 345, 000 30?, 500 Patent, net 3, 000 $1, 200, 000 $ 610, 500 Liabilities and Sharebafders' Equity Accounts payable 3 285, 000 $ 292,500 Other accrued liabilities 90, 000 75, 000 Incom taxes payable 120,000 108,000 Common Shares 255, 000 3?, 500 Retained earnings 4:50, 000 9?, 500 $1 9m nnn 3 610 500