1. Prescott Company buys 70% of Sound Inc. on January 1, 2019. At the date of acquisition, it is determined that Sound has unrecorded patent with fair value of $50,000, an estimated life of 8 years and straight-line amortization. On the consolidated balance sheet at December 31, 2020, at what value is the patent reported?

a. $37,500

b. $31,250

c. $43,750

d. $35,000