Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $114,800. At that date, the noncontrolling interest had a fair value of $49,200 and Soda reported $70,000 of common stock outstanding and retained earnings of $25,000. The differential is assigned to buildings and equipment, which had a fair value $22,000higher than book value and a remaining 10-year life, and to patents, which had a fair value $47,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:

Pop CorporationSoda CompanyItemDebitCreditDebitCreditCash & Accounts Receivable$17,400$23,600Inventory167,00037,000Land82,00042,000Buildings & Equipment360,000262,000Investment in Soda Company117,100Cost of Goods Sold188,00081,800Depreciation Expense25,00020,000Interest Expense18,0007,200Dividends Declared32,00017,000Accumulated Depreciation$142,000$90,000Accounts Payable94,40037,000Bonds Payable234,18090,000Bond Premium1,600Common Stock122,00070,000Retained Earnings129,90062,000Sales262,000140,000Other Income11,600Income from Soda Company10,420$1,006,500$1,006,500$490,600$490,600

On December 31, 20X2, Soda purchased inventory for $30,000 and sold it to Pop for $50,000. Pop resold $29,000 of the inventory (i.e., $29,000 of the $50,000 acquired from Soda)during 20X3 and had the remaining balance in inventory at December 31, 20X3.

During 20X3, Soda sold inventory purchased for $54,000 to Pop for $90,000, and Pop resold all but $26,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $16,000 to Soda for $32,000. Soda sold all but $8,000 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.

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