Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $796,960 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $996,200 although Sierra's book value was only $623,000. 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 $ 60,600 Fair Value $286,600 340,000 322,000 172,000 (132,000) (116,800) 322,000 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 incone Retained earnings, 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Padre $(1,396,980) 736,000 298,000 a 50,100 (177,120) Sierra $ (657,250) 399,000 15,100 8,600 5,550 $ (490,000) $ (229,000) $(1,380,000) (490,000) 260,000 $ (463,000) $1.610.000) 3 (229,000) 65,000 (627 000) vate Window! Go to Settings to activate Windows