On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,440,000, and retained earnings of $2,170,000. When acquired, Devine had inventories with fair values $30,000 less than carrying amount, a parcel of land with a fair value $270,000 greater than the carrying amount, and equipment with a fair value $270,000 less than carrying amount. There were also internally generated patents with an estimated market value of $470,000 and a five-year remaining life. A long-term liability had a market value $170,000 greater than carrying amount; this liability was paid off December 31, Year 10. All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts. Devine's accumulated depreciation on the plant and equipment was $570,000 at the date of acquisition.

The year 11 financial statements for Vine and Devine were as follows: INCOME STATEMENTS For year ending December 31, Year 11 (In thousands of dollars) Vine Devine Sales $13,000 $ 4,400 Dividends, investment income, and gains 1,800 2,400 Total income 14,800 6,800 Cost of goods sold 10,100 2,900 Other expenses 500 500 Income taxes 200 200 Total expenses 10,800 3,600 Profit $ 4,000 $ 3,200 STATEMENTS OF FINANCIAL POSITION December 31, Year 11 (In thousands of dollars) Vine Devine Land $ 6,000 $ 2,500 Plant and equipment 20.200 13,200 Accumulated depreciation (4,400) (3,600) Investment in Devine, cost 5,070 Inventories 6,000 3,800 Cash and current receivables 2.360 1,700 Total assets $35,230 $17,600 Ordinary shares $10,000 $ 3,440 Retained earnings 10,600 5,600 Long-term liabilities 8,000 2,500 Deferred income taxes 1,600 100 Current liabilities 5,030 5,960 Total equity and liabilities $35,230 $17,600