Following are separate financial statements of Michael Co and Aaron Company as of December 31, 2013, (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2009, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $23.50 per share.

Michael Company 12/31/13 Aaron Company 12/31/13

revenues: $(610,000) ($370,000)

cost of goods 270,000 140,000

amortization expense 115,000 80,000

Dividend Income (5,000) -0-

Net Income $(230,000) ($150,000)

Retained earnings, 1/1/13 $(880,000) $(490,000)

Net Income (above) (230,000) (150,000)

Dividends paid 90,000 5,000

Retained earnings 12/31/13 $(1,020,000) $(635,000)

Cash $110,000 $15,000

Receivables 380,000 220,000

Inventory 560,000 280,000

Investment in Aaron Co. 470,000 -0-

Copyrights 460,000 340,000

Royalty agreements 920,000 380,000

Total Assest: $2,900,000 $1,235,000

Liabilities $(780,000) $(470,000)

Preferred stock (300,000) -0-

Common Stock (500,000) (100,000)

Additional Paid in Capt (300,000) (30,000)

Retained earnings 12/31/13 $(1,020,000) (635,000)

On the date of the acquisition Aaron reported retained earnings of $230,000 and a total book value of $360,000. At the time, its royalty agreements were undervalued by $60,000.00. This in-tangible was assumed to have a six year life with no residual value. Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books.

my questions:

1.

Aaron fair Value:

Book Value of Subsidiary:

Excess Fair Over Book Value:

2. Conversion to initial value method for years prior to 2013:

Aaron retained earnings 1/1/13:

Retained earnings at date of purchase:

Increase since date of purchase:

Excess Amoritization expense:

Conversion to equity method for years prior to 2013: