in early september year 1 your firm audit client d ltd d acquired in separate transactions an 80 interest in n ltd n and a 40 interest in k ltd k

(1) $100,000 in cash, and
(2) 160,000 common shares of D recorded in the books of D at $2,000,000.
During the course of the audit, the following information was obtained:
1. The carrying amount of 80% of  net assets at the date of acquisition was $2,280,000. The acquisition differential consisted of the following:
The excess of fair value of land over carrying amount……… $ 800,000
The excess of fair value of plant and equipment over carrying amount. 700,000
20% non-controlling interest share of excess of fair value over
carrying amount………………… (300,000)
Goodwill of N written off………………. (48,000)
Deferred research and development expenditures written off…. (72,000)
Unallocated excess……………….. 640,000
……………………… $1,720,000
The plant and equipment had a remaining useful life of 10 years when D acquired N.
2. The price paid by D for its investment in K was 10% lower than 40% of the fair value of  identifiable net assets.
3. During August Year 2, K sold goods to D as follows:
Cost to K………………. $1,000,000
Normal selling price………….. 1,250,000
Price paid by D……………. 1,200,000
D had not sold these goods as of August 31, Year 2.
N also sold goods to D in August Year 2 and D had not sold them by August 31, Year 2.
Cost to N………………. $630,000
Normal selling price…………… 750,000
Price paid by D………………. 850,000
4. For the year ended August 31, Year 2,  sales were $8,423,300 and  sales were $6,144,500.
5. The companies pay income tax at the rate of 40%.
Required:
Prepare the memorandum requested by the partner.