7 On January 1, 2020. Paloma Corporation exchanged $1,710,000 cash for 90 percent of the outstanding voting stock of San Marco Company. The consideration transferred by Paloma provided a reasonable basis for assessing the total January 1, 2020, fair value of San Marco Company. At the acquisition date, San Marco reported the following owners' equity amounts in its balance sheet Common stock Additional paid-in capital Retained earnings $400,000 60,000 265,000 In determining its acquisition offer, Paloma noted that the values for San Marco's recorded assets and liabilities approximated their fair values. Paloma also observed that San Marco had developed internally a customer base with an assessed fair value of $800,000 that was not reflected on San Marco's books. Paloma expected both cost and revenue synergies from the combination At the acquisition date, Paloma prepared the following fair-value allocation schedule: Fair value of San Marco Company Book value of San Marco Company Excess fair value to customer base (18-year remaining life) to goodwill $ 1,900,000 725,000 1,175,000 800,000 375,000 At December 31, 2021, the two companies report the following balances: Revenues Cost of goods sold Depreciation expense Amortization expense Paloma $ (1,843,000) 1,100,000 125,000 275,000 ron San Marco $ (675,000) 322,000 120,000 11,000 At December 31, 2021, the two companies report the following balances: San Marco $ (675,000) 322,000 120,000 11,090 7,000 ces Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of San Marco Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Investment in San Marco Buildings and equipment Copyrights Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equities Paloma $(1,843,000) 1,100,000 125,000 275,000 27,500 (121,500) $ (437,000) $ (2,625,000) (437,000) 350,000 $(2,712, 000) $ 1,204,000 1,854,000 931,900 950,000 $ 4,939,000 (485,000) (542,000 (900,000) (300,000) (2,712,000) $ (4,939,000) $ (215,000) $ (395, 000) (215,000) 25,000 (585,000) $ 430,000 0 863.000 107,000 $ 1,400,000 (200,000) (155, 000) (400,000) (60,000) (585,000) $(1,400,000 At year-end, there were no intra-entity receivables or payables. a. Determine the consolidated balances for this business combination as of December 31, 2021. b. If instead the noncontrolling interest's acquisition-date fair value is assessed at $167,500, what changes would be evident in the consolidated statements? Complete this question by entering your answers in the tabs below. Required A Required B Determine the consolidated balances for this business combination as of December 31, 2021. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less A Noncontrolling Consolidated Interest Totals Accounts PALOMA CORPORATION AND SAN MARCO COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Paloma San Marco Debit Credit $(1,843,000) $ (675,000) 1,100,000 322,000 125,000 120,000 275.000 11,000 27.500 7,000 Revenues Cost of goods sold Depreciation expense Amortization expense interest expense Pornind Nontontrolling consolidated Interest Totals ALCounds Paloma Sun Marco (675,000) 322,000 120,000 11,000 7,000 $(1,843,000) $ 1,100,000 125,000 275,000 27,500 (121,500) $ (437,000 $ Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of San Marco Separate company net income Consolidated net income To noncontrolling interest To Paloma Company s 0 (215,000) Retained eamings, 1/1 Net income $(2,625,000 $ (437,000) 350,000 $(2,712,000) $ (395,000) (215,000) 25,000 (585,000) Dividends declared Retained earnings, 12/31 Current assets $ 1,204,000 s 1,854,000 430,000 0 Investment in San Marco 0 Customer hace or U r droid Uy Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 $(2,625,000 $ (437,000) 350,000 $(2,712,000) $ (395,000) (215,000) 25,000 (585,000) 430,000 0 Current assets Investment in San Marco 0 $ 1,204,000 $ 1,854,000 0 931,000 950,000 Customer base 863,000 107,000 Buildings and equipment Copyrights Goodwill Total assets $ 4,939,000 $ 1,400,000 (200,000) (155,000) Accounts payable Notes payable NCI in San Marco $ (485,000) $ (542,000) Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equities (900,000) (300,000) (2,712,000) $(4,939,000) S (400,000) (60,000) (585,000) (1,400,000) > Regined Required B At year-end, there were no intra entity receivables or payables. a. Determine the consolidated balances for this business combination as of December 31, 2021. b. If instead the noncontrolling interest's acquisition-date fair value is assessed at $167,500, what changes would be evident in the consolidated statements? Complete this question by entering your answers in the tabs below. Required A Required B If instead the noncontrolling interest's acquisition-date fair value is assessed at $167,500, what changes would be evident in the consolidated statements? Both goodwill and noncontrolling interest will Required B