Acquisition: goodwill, amount reported in the B/S

The pre-acquisition balance sheets

12/31/2007 in $ thousands	Acquirer	Target	Target
Book value/Fair value		BV	FV
Assets
Cash	710	100	100
Marketable securities	2,550	-	-
Inventory	2,000	400	400
Accounts receivable	3,000	500	500
PP & E	2,450	1,000	1,200
Total assets	10,710	2,000	2,200
Liabilities
Accounts payable	3,310	400	400
Long-term debt	5,000	1,000	1,000
Equity	2,400	600	800
Total liabilities and equity	10,710	2,000	2,200

• On 12/31/2007, Acquirer purchased a 35% ownership interest in a strategic new firm called Target for $300,000 in cash.
• The remaining useful life of the PP&E is 10 years with no salvage value. Both firms use the straight-line depreciation method.
• For the year ended 2008, Target reported net income of $250,000 and paid dividends of $100,000.
• During the first quarter of 2009, Target sold goods to Acquirer and recognized $15,000 of profit from the sale. At the end of the quarter, half of the goods purchased from Target remained in Acquirer's inventory.

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[Question]
The amount of (partial) goodwill as a result of Acquirer's acquisition of Target is:

300,000 - 35% * 800,000 = 300,000 - 280,000 = $20,000

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[Question]
What amount should Acquirer report in its balance sheet as a result of its investment in Target at the end of 2008?

Under the equity method,
Original amount including goodwill + %ownership * (Net income - Dividends) - %ownership * Additional depreciation
= 300,000 + 35% * (250,000 - 100,000) - 35% * ((1,200,000 - 1,000,000) - 0)/10
= 300,000 + 52,500 - 7,000
= 345,500

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[Question]
Which of the following best describes Acquirer's treatment of the intercompany sales transaction for the quarter ended 3/31/2009?
Acquirer should reduce its equity income by:

15,000 * 50% * 35% = $2,625