Q$1)$ P Corporation acquired $100$ percent of S Company$$s outstanding common stock on January $1,2022,$ for $$550,000$ cash. S reported net assets with a book value of $$350,000$ at that time. Some of S assets had fair values that differed from book values as follows:

Fair Values

Book Values

item

$160,000$

$$60,000$

land

$150,000$

$75,000$

Furniture $(5-$year life$)$

$312,000$

$342,000$

Equipment $(10-$year life$)$

Any goodwill is considered to have an indefinite life with no impairment charges during the year. Following are financial statements at the end of the first year for these two companies prepared from their separately maintained accounting systems.

S

P

ITEM

$520,000$

$1,125,000$

Revenues

$228,000$

$300,000$

COGS

$70,000$

$75,000$

Depreciation expense

$0$

$25,000$

Amortization expense

$0$

$210,000$

Income from S

$222,000$

$935,000$

Net Income

$250,000$

$700,000$

Retained earning$1/1/2022$

$222,000$

$935,000$

Net income

$80,000$

$142,000$

Dividends paid

$392,000$

$1,493,000$

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