Question: On January 2 , Year 4 , Poplar Ltd . purchased ( 8 0 % ) of the outstanding shares of Spruce

On January

2,

Year

4,

Poplar Ltd

.

purchased

\ (80 \ % \)

of the outstanding shares of Spruce Ltd

.

for

\ (\

2, 100, 000 \) .

At that date, Spruce had common shares of

\ (\

500, 000 \)

and retained earnings of

\ (\

1, 350, 000 \)

and accumulated depreciation of

\ (\

700, 000 \) .

Poplar acquired the Spruce shares to obtain control of mineral rights owned by Spruce. At the date of acquisition, these mineral rights were valued at

\ (\

775, 000 \),

were not recognized on Spruce's separate

-

entity balance sheet, and had an useful life of

10

years. Except for the mineral rights, the carrying amount of the recorded assets and liabilities of Spruce were equal to their fair values. On December

31,

Year

7,

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