Pepper Inc., a calendar-year reporting company, acquired 80 percent of Salt Inc.'s outstanding common stock for $354,000 on 12/31/X8 when the fair value of Salt's net assets was $442,500. The following data summarize the fair value calculation: Book value element Common Stock Life remaining $130,000 Retained Earnings 117,000 Under- or Overvaluation Inventory (6,500) 2 months Land 39,000 Indefinite Equipment 85,000 10 years Covenant-not-to-compete 52,000 4 years Goodwill element 26,000 Indefinite Total Cost $442,500