On January 2, Year 5, Road Ltd. acquired 70% of the outstanding voting shares of Runner...

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On January 2, Year 5, Road Ltd. acquired 70% of the outstanding voting shares of Runner Ltd. The acquisition differential of $280,000 n that date was allocated in the following manner: Inventory Land $ 40,000 90,000 Plant and equipment 40,000 Estimated life 5 years Patent Goodwill 40,000 70,000 Estimated life 8 years $280,000 he Year 9 income statements for the two companies were as follows: Sales Intercompany investment income Rental revenue Total income Materials used in manufacturing Changes in work-in-progress and finished goods inventory Employee benefits Interest expense Depreciation Patent amortization Rental expense Income tax Total expenses Profit Road $4,000,000 199,500 4,199,500 2,000,000 Runner $2,040,000 80,000 2,120,000 740,000 40,000 (30,000) 490,000 420,000 190,000 80,000 345,000 265,000 45,000 40,000 240,000 3,345,000 311,000 1,831,000 $ 854,500 $ 289,000 dditional Information Runner regularly sells raw materials to Road. Intercompany sales in Year 9 totalled $360,000. Intercompany profits in the inventories of Road were as follows: January 1, Year 9 December 31, Year 9 $130,000 110,000 Road's entire rental expense relates to equipment rented from Runner. A goodwill impairment loss of $3,000 occurred in Year 9. On January 2, Year 5, Road Ltd. acquired 70% of the outstanding voting shares of Runner Ltd. The acquisition differential of $280,000 n that date was allocated in the following manner: Inventory Land $ 40,000 90,000 Plant and equipment 40,000 Estimated life 5 years Patent Goodwill 40,000 70,000 Estimated life 8 years $280,000 he Year 9 income statements for the two companies were as follows: Sales Intercompany investment income Rental revenue Total income Materials used in manufacturing Changes in work-in-progress and finished goods inventory Employee benefits Interest expense Depreciation Patent amortization Rental expense Income tax Total expenses Profit Road $4,000,000 199,500 4,199,500 2,000,000 Runner $2,040,000 80,000 2,120,000 740,000 40,000 (30,000) 490,000 420,000 190,000 80,000 345,000 265,000 45,000 40,000 240,000 3,345,000 311,000 1,831,000 $ 854,500 $ 289,000 dditional Information Runner regularly sells raw materials to Road. Intercompany sales in Year 9 totalled $360,000. Intercompany profits in the inventories of Road were as follows: January 1, Year 9 December 31, Year 9 $130,000 110,000 Road's entire rental expense relates to equipment rented from Runner. A goodwill impairment loss of $3,000 occurred in Year 9.