Ponon Corporation acquired all of the stock of Santo Corporation on January 2, 2017, for \($25,000,000\) cash and debt. The book value of Santo's stockholders' equity was \($10,000,000\) and the resulting \($15,000,000\) excess of acquisition cost over book value was allocated as follows:

The following are the condensed financial statements of Ponon and Santo at December 31, 2017. Neither company declared dividends in 2017. Ponon uses the complete equity method to report its investment in Santo on its own books.

Required

a. Prepare a schedule to compute the 2017 equity in net income of Santo.

b. Use a working paper to consolidate the trial balances of Ponon and Santo at December 31, 2017.

c. Prepare the December 31, 2017, consolidated balance sheet and 2017 consolidated statement of comprehensive income.

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Account Inventory.... Plant assets, net. Patents (previously unrecorded). Long-term debt Goodwill.. Dr (Cr) Amortization period $2,000,000 (1) 8,000,000 8 years 1,500,000 4 years (1,000,000) 10 years 4,500,000 (2) (1) Santo uses the FIFO method of inventory valuation, and its beginning inventory was sold during 2017. (2) Goodwill is impaired by $400,000 during 2017.