Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $771,840 cash. At the acquisition date, Sierras total fair value, including the noncontrolling interest, was assessed at $964,800 although Sierras book value was only $609,000. Also, several individual items on Sierras financial records had fair values that differed from their book values as follows:

	Book Value				Fair Value
Land	$	68,400			$	300,400
Buildings and equipment (10-year remaining life)		322,000				293,000
Copyright (20-year remaining life)		125,000				263,000
Notes payable (due in 8 years)		(182,000	)			(167,200	)

For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies.

	Padre				Sierra
Revenues	$	(1,490,980	)		$	(645,950	)
Cost of goods sold		766,000				443,000
Depreciation expense		325,000				18,500
Amortization expense		0				6,250
Interest expense		49,700				5,200
Equity in income of Sierra		(133,720	)			0
Net income	$	(484,000	)		$	(173,000	)
Retained earnings, 1/1/18	$	(1,390,000	)		$	(449,000	)
Net income		(484,000	)			(173,000	)
Dividends declared		260,000				65,000
Retained earnings, 12/31/18	$	(1,614,000	)		$	(557,000	)
Current assets	$	989,440			$	600,350
Investment in Sierra		853,560				0
Land		345,000				68,400
Buildings and equipment (net)		969,000				303,500
Copyright		0				118,750
Total assets	$	3,157,000			$	1,091,000
Accounts payable	$	(276,000	)		$	(192,000	)
Notes payable		(517,000	)			(182,000	)
Common stock		(300,000	)			(100,000	)
Additional paid-in capital		(450,000	)			(60,000	)
Retained earnings (above)		(1,614,000	)			(557,000	)
Total liabilities and equities	$	(3,157,000	)		$	(1,091,000	)

At year-end, there were no intra-entity receivables or payables.