Parent Company purchased 80% of the outstanding stock of Subsidiary Company on January 1, 2024, for $802,720 cash. At the acquisition date, Subsidiarys total fair value, including the noncontrolling interest, was assessed at $1,003,400, although Subsidiarys book value was only $690,000.

At the date of acquisition, several individual items on Subsidiarys financial records had fair values that differed from their book values as follows:

Book Value Fair Value Land $65,000 $290,000 Buildings and equipment (10-year remaining life) 287,000 263,000 Copyright (20-year remaining life) 122,000 216,000 Notes payable (8-year remaining life) (176,000) (157,600)

For internal reporting purposes, Parent employs the equity method to account for this investment. The account balances for Parent and Subsidiary for the year ending December 31, 2024, are given on the next page.

At year-end, there were no intra-entity receivables or payables.

Parent Subsidiary Revenues $ (1,394,980) $ (684,900) Cost of goods sold 774,000 432,000 Depreciation expense 274,000 11,600 Amortization expense - 6,100 Interest expense 52,100 9,200 Equity in income of subsidiary (177,120) Net income $ (472,000) $ (226,000) Retained earnings, 1/1/24 $ (1,275,000) $ (530,000) Net income (472,000) (226,000) Dividends declared 260,000 65,000 Retained earnings, 12/31/24 $ (1,487,000) $ (691,000) Current assets $ 856,160 $ 764,700 Investment in Subsidiary 927,840 - Land 360,000 65,000 Buildings and equipment (net) 909,000 275,400 Copyright - 115,900 Total assets $ 3,053,000 $ 1,221,000 Accounts payable $ (275,000) $ (194,000) Notes payable (541,000) (176,000) Common stock (300,000) (100,000) Additional paid-in-capital (450,000) (60,000) Retained earnings, 12/31/24 (1,487,000) (691,000) Total liabilities and equities $ (3,053,000) $ (1,221,000)

1. Prepare a fair value allocation schedule at the date of acquisition.