Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts: Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Item Cash $ 38,000 Accounts Receivable 50,000 Inventory 240,000 Land 80,000 Buildings and Equipment 500,000 Investment in Sheet Company 202,000 Cost of Goods Sold 500,000 Depreciation Expense 25,000 Other Expenses 75,000 50,000 Pillow Corporation Debit Sheet Company Credit Debit Credit $ 25,000 55,000 100,000 20,000 150,000 250,000 15,000 75,000 20,000 $ 155,000 70,000 $ 75,000 35,000 200,000 50,000 Common Stock 300,000 50,000 Retained Earnings 290,000 100,000 Sales 700,000 400,000 Income from Sheet Company 45,000 $ 1,760,000 $ 1,760,000 $ 710,000 $ 710,000 Additional Information 1. On January 1, 20X7, Sheet reported net assets with a book value of $150,000 and a fair value of $191,250. Accumulated depreciation on Buildings and Equipment was $60,000 on the acquisition date. 2. Sheet's depreciable assets had an estimated economic life of 11 years on the date of combination. Goodwill of $25,000 was recorded at the acquisition. 3. Pillow used the equity method in accounting for its investment in Sheet. 4. Detailed analysis of receivables and payables showed that Sheet owed Pillow $16,000 on December 31, 20X7.