Branson paid $621,000 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2017. On that date, the subsidiary had a book value of $433,000 (common stock of $200,000 and retained earnings of $233,000), although various unrecorded royalty agreements (10-year remaining life) were assessed at a $160,000 fair value. Any remaining excess fair value was considered goodwill.

In negotiating the acquisition price, Branson also promised to pay Wolfpacks former owners an additional $70,000 if Wolfpacks income exceeded $120,000 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 $49,000. On December 31, 2017, based on Wolfpacks earnings to date, Branson increased the value of the contingency to $56,000.

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

	Net Income			Dividends Declared
2017	$	65,900		$	20,000
2018		75,900			30,000

In keeping with the original acquisition agreement, on December 31, 2018, Branson paid the additional $70,000 performance fee to Wolfpacks previous owners.

Prepare each of the following:

1. Bransons entry to record the acquisition of the shares of its Wolfpack subsidiary.

2. Bransons entries at the end of 2017 and 2018 to adjust its contingent performance obligation for changes in fair value and the December 31, 2018, payment.

3. Prepare consolidation worksheet entries as of December 31, 2018, assuming that Branson has applied the equity method.

4. Prepare consolidation worksheet entries as of December 31, 2018, assuming that Branson has applied the initial value method.