Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31,201, for $2,100,000. At the date of acquisition, Sword reported common stock with a par value of $940,000, additional paid-in capital of $1,290,000, and retained earnings of $540,000. The fair value of the noncontrolling interest at acquisition was $700,000. The differential at acquisition was attributable to the following items: During 202, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $4,200; Sword continues to hold the land. In 206, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis; Sword pays Prince a fixed fee of $87,000 per year for these services. At December 31 , 208, Sword owed Prince $21,750 as the final 208 quarterly payment under the contract. On January 2, 20X8, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27,202, for $450,000. The equipment is expected to have a total 15 -year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31,208, trial balances for Prince and Sword appeared as follows: As of December 31,208, Sword had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight-line depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. Required: Required: a. Compute the amount of the differential as of January 1, 208. b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 208