Return to questic Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2021 (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2017, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $29.50 per share. Revenues Cost of goods sold Amortization expense Dividend income Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Cash Retained earnings, 12/31/21 Receivables Inventory Investment in Aaron Company Copyrights Royalty agreements Total assets Liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and equity Michael Company 12/31/21 $ (686,500) 308,250 137,400 (5,000) $ (245,850) $ (926,000) (245,850) 90,000 Aaron Company 12/31/21 $ (505,500) 207,750 80,500 0 $ (217,250) $ (659,000) (217,250) 5,000 $(1,081,850) $ (871,250) $ 208,000 $ 24,200 446,000 308,000 583,000 292,000 590,000 0 499,000 937,000 $ 3,263,000 5(1,081,150) (300,000) 346,000 440,000 $ 1,410,200 $ (408,950) (100,000 (30,000) (871,250) (500,000) (300,000) (1,081,850) $(3,263,000) 5(1,410,200) On the date of acquisition, Aaron reported retained earnings of $350.000 and a total book value of $480,000 At that time, its royalty agreements were undervalued by $60,000 This intangible was assumed to have a six-year remaining life with no residual value Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books. Aaron declared and paid dividends in the same period