Problem 5-9 (LO 2) 90%, cost, machine, merchandise, effective interest bonds. Princess Company acquired a 90% interest in Sundown Company on January 1, 2011, for $675,000. Any excess of cost over book value was due to goodwill. Capital balances of Sundown Company on January 1, 2011, were as follows: Common stock($10par)..................... $200,000 Paid-in capital inexcess o fpar ................ 100,000 Retained earnings .......................... 300,000 Total equity ............................. $600,000 Sundown Company sold a machine to Princess for $30,000 on January 1, 2014. It cost Sun- down $20,000 to build the machine, which had a 5-year remaining life on the date of the sale and is subject to straight-line depreciation. Princess purchased one-half of the outstanding 9% bonds of Sundown for $89,186 (to yield 12%) on December 31, 2015. The bonds were sold originally by Sundown to yield 10% to out- side parties. The discount on the entire set of bonds was $7,582 on December 31, 2015. The effective interest method of amortization is used. During 2016, Princess Company sold merchandise to Sundown for $50,000. Princess recorded a 30% gross profit on the sales price. $20,000 of the merchandise purchased from Princess remains unsold at the end of the year.The trial balances of Princess and its subsidiary, Sundown, are as follows on December 31, 2016: Inventory ................................................. Equipment................................................ Accumulated Depreciation ................................... Investmentin Sundown Stock.................................. InvestmentinSundownBonds................................. BondsPayable(9%) ........................................ DiscountonBondsPayable................................... CommonStock($10par) .................................... Paid-InCapitalinExcessofPar ................................ RetainedEarnings,January1,2016............................ Sales .................................................... CostofGoodsSold......................................... InterestIncome............................................. OtherExpenses............................................ InterestExpense............................................ Totals.................................................. Princess Company 25,000 371,190 (200,000) 675,000 90,888 (200,000) (300,000) (401,376) (300,000) 100,000 (10,702) 150,000 Sundown Company 80,000 1,522,413 (600,000) (200,000) 6,345 (200,000) (100,000) (500,000) (260,000) 72,000 160,000 19,242 Cash .................................................... AccountsReceivable(net) .................................... Inventory ................................................. PrepaidRentonEquipment ................................... InvestmentinBonds......................................... InvestmentinSymCorporation ................................ Land..................................................... PlantandEquipment ........................................ AccumulatedDepreciationPlantandEquipment................. EquipmentUnderOperatingLease............................. Accumulated DepreciationAssets Under Operating Lease . . . . . . . . . AccountsPayable .......................................... DeferredRentRevenue ...................................... CommonStock(nopar)...................................... RetainedEarnings,January1,2018............................ Paratec Corporation 190,000 738,350 500,000 250,000 400,000 250,000 1,950,000 (250,000) 120,000 (36,000) (385,000) (7,000) (2,000,000) (1,076,350) Sym Corporation 40,000 142,000 75,000 7,000 65,000 85,000 295,000 (60,000) (52,000) (200,000) (310,000) Prepare the Intercompany fixed asset profit deferral