Q. No. 1. Remburn Inc. Inc. purchased 90% of the outstanding voting shares of Stanton Inc. for $90,000 on January 1, 2019. On that date, Stanton Inc. had common shares and retained earnings worth $30,000 and $20,000, respectively. The equipment had a remaining useful life of 10 years from the date of acquisition. Stanton's trademark is estimated to have a remaining life of 5 years from the date of acquisition. Stanton's bonds mature on January 1, 2039. The inventory was sold in the year following the acquisition. Both companies use straight line amortization, and no salvage value is assumed for assets. Remburn Inc. and Stanton Inc. declared and paid $12,000 and $4,000 in dividends, respectively during the year. The balance sheets of both companies, as well as Stanton's fair values on the date of acquisition are shown below: Remburn Inc. Stanton Inc. Stanton Inc. (carrying value) (carrying value) (fair value) Cash $400,000 $5,000 $5,000 Accounts Receivable $240,000 $30,000 $30,000 Inventory $60,000 $30,000 $50,000 Investment in Stanton Inc. $90,000 Equipment (net) $160,000 $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $15,000 Total Assets $950,000 $120,000 Current Liabilities $500,000 $50,000 $50,000 Bonds Payable $120,000 $20,000 $30,000 Common Shares $200,000 $30,000 Retained Earnings $130,000 $20,000 Total Liabilities and Equity $950,000 $120,000 The following are the financial statements for both companies for the fiscal year ended December 31, 2019: Income Statements Sales $295,750 $125,000 Dividend income $3,600 Less: Expenses: Cost of Goods Sold $200,000 $19,000 Depreciation $10,000 $25,000 Interest Expense $16,000 $36,000 Other Expenses $5,000 $28,000 Gain on Sale of Land $- $(8,000) Net Income $68,350 $25,000 Retained Earnings Statements Balance, January 1, 2019 $130,000 $20,000 Net Income $68,350 $25,000 Dividends $(12,000) $(4,000) Balance, December 31, 2019 $186,350 $41,000 Balance Sheets Remburn Inc. Stanton Inc. Cash $190,950 $156,000 Accounts Receivable $200,000 $150,000 Investment in Stanton Inc. $90,000 Inventory $100,000 $30,000 Equipment (net) $350,000 $25,000 Trademark $10,000 Total Assets $930,950 $371,000 Current Liabilities $424,600 $280,000 Bonds Payable $120,000 $20,000 Common Shares $200,000 $30,000 Retained Earnings $186,350 $41,000 Total Liabilities and Equity $930,950 $371,000