Plethora Company used stock with a par value of $300,000 to acquire 100 percent of Sparse Company's assets on January 1, 20x5. On that date the fair value of the stock issued by Plethora was $600,000 and the following balance sheet data were reported by Sparse:

Balance Sheet Item	Historical Cost	Fair Value
Cash and Receivables	65,000	60,000
Inventory	125,000	140,000
Land	55,000	150,000
Plant and Equipment	600,000	350,000
Less: Accumulated Depreciation	(250,000)
Goodwill	30,000
Total Assets	625,000	700,000
Accounts Payable	50,000	50,000
Common Stock	220,000
Additional Paid in Capital	260,000
Retained Earnings	95,000
Total Liabilities and Equities	625,000

At what value will Sparses Inventory be carried on Plethoras books after the acquisition?

	1.	$0
	2.	$265,000
	3.	$125,000
	4.	$140,000
	5.	None of the above