Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $680,000 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $850,000 although Sierra's book value was only $600,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book Value Fair Value $ 60,000 275,000 $225,000 250,000 100,000 200,000 (130,000) (120,000) 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, 2021, for both companies. Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income. Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable Common stock Additional paid-in capital Datained earnings fahmuel Padre $(1,360,000) 700,000 260,000 Sierra $ (540,000) 385,000 10,000 e 44,000 (105,000) $ (461,000) $(1,265,000) (461,000) 260,000 $(1,466,000) $ 965,000 733,000 292,000 877,000 8 $ 2,867,000 $ (191,000) (460,000) (300,000) (450,000) (1 466 AAA) 5,000 5,000 $ (135,000) $ (440,000) (135,000) 65,000 $ (510,000) $ 528,000 e 60,000 265,000 95,000 $ 948,000 $ (148,000) (130,000) (100,000) (60,000) 7510 081