Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $788,160 cash. At the acquisition date, Sierras total fair value, including the noncontrolling interest, was assessed at $985,200 although Sierras book value was only $633,000. Also, several individual items on Sierras financial records had fair values that differed from their book values as follows:

Book Value Fair Value Land $ 68,300 $ 323,300 Buildings and equipment (10-year remaining life) 353,000 305,000 Copyright (20-year remaining life) 108,000 240,000 Notes payable (due in 8 years) (198,000 ) (184,800 )

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.