Assume that, on January 1, 2019, P Company acquired an 70% interest in its subsidiary, S Company. The aggregate fair value of the controlling and noncontrolling interest was $400,000 in excess of S Companys Stockholders Equity on the acquisition date. At the time of acquisition, S Companys retained earnings balance was $415,000. The parent uses the cost method to account for its investment in S company. The parent assigned the acquisition accounting premium (AAP) as follows:

AAP Item	Initial Fair Value	Useful Life (years)
PPE, net	$220,000	10
Customer List	120,000	10
Goodwill	60,000	Indefinite
	$400,000

P Company and S Company report the following financial statements at December 31, 2023:

Income Statement

	Parent		Subsidiary
Sales	$ 6,500,000		$600,000
Cost of goods sold	(4,250,000	)	(350,000	)
Gross Profit	2,250,000		250,000
Income (loss) from subsidiary	13,125
Operating expenses	(1,250,000	)	(142,000	)
Net income	$1,013,125		$108,000

Statement of Retained Earnings

	Parent		Subsidiary
BOY Retained Earnings	$7,900,000		$ 958,000
Net income	1,013,125		108,000
Dividends	(102,540	)	(18,750	)
EOY Retained Earnings	$8,810,585		$1,047,250

Balance Sheet

	Parent		Subsidiary
Assets:
Cash	$ 500,000		$ 250,000
Accounts receivable	2,045,000		425,000
Inventory	657,000		624,500
Equity Investment	1,025,000
PPE, net	9,753,585		511,750
	$13,980,585		$1,811,250
Liabilities and Stockholders' Equity:
Current Liabilities	$ 900,000		$ 370,000
Long-term Liabilities	1,570,000		0
Common Stock	600,000		42,000
APIC	2,100,000		352,000
Retained Earnings	8,810,585		1,047,250
	$13,980,585		$1,811,250

The December 31, 2023 pre-consolidation balance of the equity investment accounting equals $1,025,000 (i.e., 5 years subsequent to the acquisition). On this date, the equity investment balance implicitly includes:

Select one:

A. Goodwill, $60,000

B. Dividends, $13,125

C. Unamortized AAP excluding Goodwill, $204,000

D. Goodwill, $48,000