On January 1, 2011, Allan Company bought a 15 percent interest in Sysinger Company. The acquisition price of $184,500 reflected an assessment that all of Sysinger€™s accounts were fairly valued within the company€™s accounting records. During 2011, Sysinger reported net income of $100,000 and paid cash dividends of $30,000. Allan possessed the ability to influence significantly Sysinger€™s operations and, therefore, accounted for this investment using the equity method.
On January 1, 2012, Allan acquired an additional 80 percent interest in Sysinger and provided the following fair value assessments of Sysinger€™s ownership components:
Consideration transferred by Allan for 80% interest . . . . . . . . . . . . . $1,400,000
Fair value of Allan€™s 15% previous ownership . . . . . . . . . . . . . . . . . . . . 262,500
Noncontrolling interest€™s 5% fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,500
Total acquisition-date fair value for Sysinger Company . . . . . . . . . . . $1,750,000

Also, as of January 1, 2012, Allan assessed a $400,000 value to an unrecorded customer contract recently negotiated by Sysinger. The customer contract is anticipated to have a remaining life of 4 years. Sysinger€™s other assets and liabilities were judged to have fair values equal to their book values. Allan elects to continue applying the equity method to this investment for internal reporting purposes.
At December 31, 2012, the following financial information is available for consolidation:

a. How should Allan allocate Sysinger€™s total acquisition-date fair value (January 1, 2012) to the assets acquired and liabilities assumed for consolidation purposes?
b. Show how the following amounts on Allan€™s pre-consolidation 2012 statements were derived:
€¢ Equity in earnings of Sysinger.
€¢ Gain on revaluation of Investment in Sysinger to fair value.
€¢ Investment in Sysinger.
c. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31,2012.

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(931,000) $380,000) Equity earnings of Sysinger Gain on revaluation of Investment in Sysinger Net income Retained earnings, January 1 Cash dividends paid to stockholders Retained earnings, December 31 (710,000) Investment in Sysinger (equity method) Property, plant, and equipment Patented technology. Customer contract 6 3 $ 3,636,000 $1500,000 (1.300,000) (90,000) Additional paid-in capital Retained earnings, December 31. Total liabilities and equities