Carmelo paid $700,000 cash for all the outstanding common stock of Stoudemire, Inc. on January 1, 2022. On that date, the subsidiary had a book value of $400,000, although various unrecorded royalty agreements were assessed at a $200,000 fair value. The royalty agreement had an estimated 5-year remaining useful life.

In negotiating, the acquisition price, Carmelo also promised to pay Stoudemire's former owners an additional $80,000 if Stoudemire's net income exceeded $800,000 total over the two years after acquisition (2022-2023). At the acquisition date, Carmelo estimated the probability adjusted present value of this contingent consideration at $50,000.

At the end of 2022, it was learned that Stoudemire's net income for 2022 was $100,000. On 12/31/22, Carmelo decreased the value of the contingency to $30,000.

At the end of 2023, it was learned that Stoudemire's net income for 2023 was $ 1,000,000. On 12/31/23, Carmelo paid the additional $80,000 performance fee to Stoudemire's previous owners.

Required: Prepare the journal entries requested. Enter your journal entries in the space provided below:

Carmelo's entry to record the acquisition of the shares of its Stoudemire subsidiary.

Carmelo's entry at the end of 2022 and 2023 to adjust its contingent performance obligation for changes in fair value and the 12/31/23 payment.