Branson paid $$607,500$ cash for all of the outstanding common stock of Wolfpack, Inc., on January $1,2020.$ On that date, the subsidiary had a book value of $$373,000($common stock of $$200,000$ and retained earnings of $$173,000),$ although various unrecorded royalty agreements $(10-$year remaining life$)$ were assessed at a $$199,000$ fair value. Any remaining excess fair value was considered goodwill.

In negotiating the acquisition price, Branson also promised to pay Wolfpack$$s former owners an additional $$45,000$ if Wolfpack$$s income exceeded $$150,000$ total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability$-$adjusted present value of this contingent consideration at $$31,500.$ On December $31,2020,$ based on Wolfpack$$s earnings to date, Branson increased the value of the contingency to $$36,000.$

During the subsequent two years, Wolfpack reported the following amounts for income and dividends:

Net Income Dividends Declared

$2020$ $ $80,500$ $ $25,000$

$202190,50035,000$

In keeping with the original acquisition agreement, on December $31,2021,$ Branson paid the additional $$45,000$ performance fee to Wolfpack$$s previous owners.

Prepare each of the following:

Branson$$s entry to record the acquisition of the shares of its Wolfpack subsidiary.

Branson$$s entries at the end of $2020$ and $2021$ to adjust its contingent performance obligation for changes in fair value and the December $31,2021,$ payment.

Prepare consolidation worksheet entries as of December $31,2021,$ assuming that Branson has applied the equity method.

Prepare consolidation worksheet entries as of December $31,2021,$ assuming that Branson has applied the initial value method.