On January 1,2018, Pontiac Corp. purchased 85.00% of the net assets of Sunbeam Corp. for $238,078. The fair value of Sunbeam Corp. on

January 1, 2011 is estimated to be $280,091. The write-up of the Buildings and Equipment from book value to fair market value amounted to

53.00% of the total differential. The write-up of the Land from book value to fair market value amounted to 14.00% of the total differential.The

remaining 33.00% of the total differential is attributable to Goodwill.The remaining useful life of the Buildings and Equipment is assumed to be 10

years. Goodwill is impaired at the end of 2018 and 2019 and must be written down, each year, by 11.00% of its original (initial) value. The company

uses the equity method approach to account for the goodwill impairment

A complete set of financial statements for fiscal years 2018 and 2019 for Pontiac Corp. is located in Exhibit 3. A complete set of financial

Exhibit 3 Pontiac Pontiac 12/31/18 12/31/19 INCOME STATEMENT Sales $ 1,013,250 $ 1,114,575 CGS 723,750 $ 796,125 Deprec and Amort 36,187 36,187 Other Expenses 108,563 119,419 Company Net Income 144,750 162,844 Income from Subsidiary (Sanchez) 69,043 76,241 Net Income 213,793 $ 239,084 STATEMENT OF RETAINED EARNINGS Retained Earnings 1/1/X7 290,000 $ 431,418 Net Income (from Above) 213,793 239,084 Dividends Declared 72,375 $ 119,542 Retained Earnings 12/31/X7 431,418 $ 550,960 BALANCE SHEET Cash 365,755 $ 452,321 AR 101,325 111,458 Inventory 253,312 278,644 Land 115,800 115,800 Build&Equip-HC 723,750 $ 723,750 Acc Dep 166, 188 $ 202,375 Build&Equip-Net 557,562 $ 521,375 Investment in Subsidiary (Sanchez) 282,513 326,346 Goodwill Differential Total Assets $ 1,676,268 $ 1,805,943 AP 101,325 $ 111,458 Bonds Payable 564,525 $ 564,525 Total Liabilities 665,850 $ 675,982 Shareholders Equity Common Stock $ 579,000 $ 579,000 Retained Earnings (from above) 431,418 $ 550,960 Total Shareholders Equity $ 1,010,418 $ 1, 129,960 TL +TSE $ 1,676,268 $ 1,805,943 Balance $ SExhibit 4 Sunbeam Sunbeam 12/31/18 12/31/19 INCOME STATEMENT Sales 579,000 $ 607,950 Income from Subsidiary EA Total Sales 579,000 $ 607,950 CGS $ 361,875 $ 376,929 Deprec and Amort 21,712 $ 21,712 Other Expenses 108,563 113,991 Net Income 86,850 95,318 STATEMENT OF RETAINED EARNINGS Retained Earnings (BOY 144,750 $ 202,650 Net Income (from Above) 86,850 95,318 Dividends Declared 28,950 38,127 Retained Earnings (EOY) 202,650 $ 259,841 BALANCE SHEET Cash 36, 187 $ 68,409 AR 79,612 $ 91, 192 Inventory 144,750 182,385 Land 28,950 28,950 Build&Equip-HC 217, 125 $ 217,125 Acc Dep 108,563 $ 130,275 Build&Equip-Net 108,563 $ 86,850 Total Assets $ 398,062 $ 457,786 AP 50,662 $ 53,196 Bonds Payable 72,375 72,375 Total Liabilities 123,038 $ 125,571 Shareholders Equity Common Stock $ 72,375 $ 72,375 Retained Earnings (from above) 202,650 $ 259,841 Total Shareholders Equity 275,025 $ 332,216 TL +TSE $ 398,062 $ 457,786 Balance $