Case 3.3Step AcquisitionsOn January 1, 2012, Porter Company bought a 20% interest in Salem Company for $275,000. Anydifference between book value and the value implied by the price paid relates to the investeesinventory (turnover 1 year). During 2012, Salem reported net income of $110,000 and paid cashdividends of $33,000.On January, 1 2013, Porter acquired an additional 70% by $1,347,500 cash. The considerationtransferred by Porter in its second acquisition of Salem represents the best available evidence formeasuring the fair value of Salem Company at January 1, 2013.Also, as of January 1, 2013, Porter assessed a $440,000 value to an unrecorded customer contractrecently negotiated by Salem. The customer contract is anticipated to have a remaining life of 4-years.Salems other assets and liabilities were judged to have fair values equal to their book values. Porterelects to continue applying the equity method to this investment for internal reporting purposes.At December 31, 2013, the following financial information is available for consolidation:BALANCE SHEETPorter SalemDecember 31, 2013 December 31, 2013Current Assets 316,800 594,000Investment in Salem Company ? 0Property, plant, and equipment 908,600 649,000Patented Technology 935,000 407,000Total Assets ? 1,650,000Liabilities 1,430,000 99,000Common Stock 990,000 550,000APIC 198,000 220,000R/E January 1, 2013 942,700 660,000Net Income ? 165,000Dividend Paid (154,000) (44,000)Total Liabilities + Equity ? 1,650,000INCOME STATEMENT Porter Salem2013 2013Revenue 1,024,100 418,000Operating ExpensesIncome in Salem's earningGain (Loss) on revaluation of Investment IN Salem to fair value(676,500)??(253,000)Net Income ? 165,000Required:1. Calculate the following amounts on Porter pre-consolidation 2013 statement (6 points)a. Investment in Salemb. Income in Salems earningsc. Gain (Loss) on Revaluation of Investment in Salem to fair value2. Calculate the balance of NCI at December 31, 2013. Provide detail calculations (2 points).3. Prepare a worksheet to consolidate the financial statements of these two companies as ofDecember 31, 2013 (12 points).