Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $754,080 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $942,600 although Sierra's book value was only $659,000. 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 63,000 355,000 137,000 (155, 000) Fair Value 297,000 311,000 217,000 (141,400) 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 (1,427,540) (657,900) 413,000 11,500 6,850 6,550 752,000 292,000 43,500 174,960 Net income $ (515,000) (220,000) Retained earnings, 1/1/18 Net income Dividends declared $ (1,362,500 (499,000) (220,000) (515,000) 260,000 65,000 (1,617,500) (654,000) $ 650,350 Retained earnings, 12/31/18 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright $ 941,460 877,040 308,000 924,000 63,000 343,500 130,150 $ 1,187,000 Total assets $ 3,050,500 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) $ (218,000) (218,000) (155,000) (100,000) (60,000) (1,617,500(654,000) $ (3,050,500) $(1,187,000) (465, 000) (300,000) 450,000) Total 1iabilities and equities