Pop Corporation acquired 80 percent of Son Corporation’s common stock on January 1, 2016, for$420,000 cash. The stockholders’ equity of Son at this time consisted of $300,000 capital stock and$100,000...

Pop Corporation acquired 80 percent of Son Corporation’s common stock on January 1, 2016, for$420,000 cash. The stockholders’ equity of Son at this time consisted of $300,000 capital stock and$100,000 retained earnings. The difference between the fair value of Son and the underlying equityacquired in Son was due to a $25,000 undervaluation of Son’s inventory, a $50,000 undervaluation ofSon’s equipment, and goodwill.