1) On January 1, 20X7, Granite reported net assets with a book value of $150,000 and a fair value of $191,250.
2) Granite’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of granite’s net assets is related entirely to buildings and equipment.
3) Mortar used the equity method in accounting for its investment in Granite.
4) Detailed analysis of receivables and payables showed that Granite owed Mortar $16,000 on December 31, 20X7.
5) Assume that any goodwill impairment should be recorded as an adjustment in Mortar’s equity method accounts along with the amortization of other differential components.