Presley Pools Inc. acquired 60 percent of the common stock of Jacobs Jacuzzi Company on December 31, 20X6, for $1,800,000. At that date, the fair value of the noncontrolling interest was $1,200,000. The full amount of the differential was assigned to goodwill. On December 31, 20X7, Presley Pools management reviewed the amount attributed to goodwill and concluded an impairment loss of $26,000 should be recognized in 20X7. On January 2, 20X7, Presley purchased 20 percent of the outstanding preferred shares of Jacobs for $42,000. In its 20X6 annual report, Jacobs reported the following stockholders' equity balances at the end of the year: Preferred Stock (10 percent, $100 par) Premium on Preferred Stock Common Stock Additional Paid-In Capital-Common Retained Earnings $ 200,000 5,000 500,000 800,000 1,650,000 Total Stockholders' Equity $ 3,155,000 Because of cash flow problems, Jacobs declared no dividends during 20X6, the first time it had missed a preferred dividend. With the improvement in operations during 20X7, Jacobs declared the current stated preferred dividend as well as preferred dividends in arrears; Jacobs also declared a common dividend for 20X7 of $10,000. Jacobs' reported net income for 20X7 was $280,000 Presley Pools Inc. acquired 60 percent of the common stock of Jacobs Jacuzzi Company on December 31, 20X6, for $1,800,000. At that date, the fair value of the noncontrolling interest was $1,200,000. The full amount of the differential was assigned to goodwill. On December 31, 20X7, Presley Pools management reviewed the amount attributed to goodwill and concluded an impairment loss of $26,000 should be recognized in 20X7. On January 2, 20X7, Presley purchased 20 percent of the outstanding preferred shares of Jacobs for $42,000. In its 20X6 annual report, Jacobs reported the following stockholders' equity balances at the end of the year: Preferred Stock (10 percent, $100 par) Premium on Preferred Stock Common Stock Additional Paid-In Capital-Common Retained Earnings $ 200,000 5,000 500,000 800,000 1,650,000 Total Stockholders' Equity $ 3,155,000 Because of cash flow problems, Jacobs declared no dividends during 20X6, the first time it had missed a preferred dividend. With the improvement in operations during 20X7, Jacobs declared the current stated preferred dividend as well as preferred dividends in arrears; Jacobs also declared a common dividend for 20X7 of $10,000. Jacobs' reported net income for 20X7 was $280,000