Required information On January 1, 2022, Pacer Corporation (Pacer) acquired 80\% of Sprint Ltd. (Sprint) Corp. for $500,000. Please uses the cost method to account for its investment. On January 1, 2022, Sprint's retained earnings and common shares were $350,000 and $110,000, respectively. Sprint's book values did not differ materially from its fair values on the date of acquisition with the following exceptions: - Inventory had a fair value that was $20,000 higher than its book value. This inventory was sold to outsiders during 2022. - A patent (which had not previously been accounted for) was identified on the acquisition date with an estimated fair value of $15,000. The patent had an estimated useful life of 3 years. The financial statements of Pacer and Sprint for the year ended December 31, 2023 are shown below: Income Statements Retained Earnings Statements Balance Sheets - Pacer sold land to Sprint at a profit of $10,000 during 2023 . This land is still owned by Sprint on December 31,2023. - On January 1, 2023, Sprint sold equipment to Pacer at a price that was $20,000 higher than its book value. The equipment had a remaining useful life of 4 years from that date. - On January 1, 2023, Pacer's inventories contained items purchased during 2022 from Sprint for $12,000. This entire inventory was sold to outsiders during 2023. During 2023 , Pacer sold inventory to Sprint for $50,000. 70\% of this inventory is still in Sprint's warehouse at year end. All sales are priced at a 25% mark-up above cost, regardless of whether the sales are internal or external. - There was a goodwill impairment loss of $4,000 during 2023. - Both companies are subject to an effective tax rate of 40%. Note: disregard capital gains for tax purposes. - Both companies use straight line amortization. Which of the following is the correct amount of goodwill arising from this business combination on the acquisition date? Multiple Choice Nil $72,000 $130,000 $220,000