On January 1, 2005, Petrel, Inc. purchased 70% of the outstanding voting common stock of Ocean, Inc., for $2,600,000. The book value of Ocean’s net equity on that date was $3,100,000. Book values were equal to fair values except as follows:
| Book | Fair | |||||
| Assets & Liabilities | Values | Values | Difference | |||
| Equipment | $250,000 | $190,000 | ($60,000) | |||
| Building | 600,000 | 700,000 | 100,000 | |||
| Notes Payables | 270,000 | 240,000 | (30,000) | |||
| $1,120,000 | $1,130,000 | $10,000 | ||||
