, On January 2. Year 4, Poplar Ltd. purchased 80% of the outstanding shares of Spruce Ltd. for $2.080.000. At that date, Spruce had common shares of $500,000 and retained earnings of $1.330,000 and accumulated depreciation of $680,000. Poplar acquired the Spruce shares to obtain control of mineral rights owned by Spruce. At the date of acquisition, these mineral rights were valued at $770,000, were not recognized on Spruce's separate-entity balance sheet, and had an useful life of 10 years. Except for the mineral rights the carrying amount of the recorded assets and liabilities of Spruce were equal to their fair values. On December 31, Yes 7 the fital balances of the two companies were as follows: Spruce Cash Accounts receivable Inventory Plant and equipment Investment in Spruce (cost) Investment in bonds Cost of goods sold Other expenses Interest expense Income tax expense Dividends Poplar 51,000,000 $ 500,000 2,160,000 3,240,000 438,000 2,006,000 15,120,000 2,900,000 2,080,000 242,000 2,480,000 863,600 979,000 301,000 37,000 726,400 430,000 600,000 250,000 $28,502,400 $8,105,600 Accounts payable Accumdated depreciation: plant and equipment Fonds payable Premium in bonds payable Common shares Retained earnings, January 1 Sales Dividend revenue Interest revenue $ 2,568,000 4,128,800 500,000 12,000 4,500,000 11,613,600 4,980,000 200,000 $28,502,400 $2,558,500 1,000,000 500,000 1,857,600 2,007,500 22,000 $8,105,600 Additional Information