On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $937,500. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $218,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 315,000 $515,000 The following are the statements of retained earnings for the two companies for Years 5 and 6: Sic Year 6 Pic Year 5 Retained earnings, beginning of year $ 530,000 Profit Dividends 138,000 (100,000) Year 6 $ 568,000 173,000 (120,000) Year 5 $315,000 $364,000 139,000 257,500 (90,000) (90,000) Retained earnings, end of year $ 568,000 $ 621,000 $364,000 $531,500 Additional Information Pic uses the cost method to account for its investment in Sic. Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year 7. Neither company has any customer contracts recorded on their separate-entity records. There were no unrealized profits from intercompany transactions since the date of acquisition.