Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $791,520 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $989,400 although Sierra's book value was only $638,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Fair Value 307,200 276,000 218,000 (172,600) Book Value Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) $ 65,200 295,000 104,000 187,000) 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, 2018, for both companies Padre Sierra Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra (1,401,180) (647,000) 426,000 15,500 5,200 5,300 770,000 264,000 50,700 (151,520) $ (468,000) (195,000) $ (1,492,500) (478,000) 195,000) Net income Retained earnings, 1/1/18 Net income Dividends declared (468, 000) 260,000 65,000 Retained earnings, 12/31/18 Current assets Investment in Sierra Land Buildings and equipment (net Copyright (1,700,500) (608,000) $ 998,460 891,040 349,000 944,000 0 3,182,500 $ 681,500 65,200 279,500 98,800 1,125,000 Total assets Accounts payable $ (205,000) 170,000)