On January 1, 2014, Postman Company acquired Spartan Company. Postman paid $400,000 for 80% of Spartan’s common stock. On the date of acquisition, Spartan had the following balance sheet: Buildings,...

On January 1, 2014, Postman Company acquired Spartan Company. Postman paid $400,000 for 80% of Spartan’s common stock. On the date of acquisition, Spartan had the following balance sheet:

Buildings, which have a 20-year life, are undervalued by $130,000. Equipment, which has a 5-year life, is undervalued by $50,000. Any remaining excess is considered to be goodwill. Spartan issued $100,000 of 8%, 10-year bonds for $103,432 on January 1, 2011, when the market rate was 7.5%. Annual interest is paid on December 31. Postman purchased the bonds for $95,514 on January 1, 2015, when the market rate was 9%. Both companies use the effective interest method to amortize the premium/discount on the bonds. Postman and Spartan prepared the following bond amortization schedules: