Instruction:

Following are separate financial statements of Mix Company and Air Company as of December $31,2021($credit balances indicated by parantheses$).$

Mix acquired all of Air's outstanding voting stock on January $1,2017,$ by issuing $20,000$ shares of its own $$1$ par common stock.

On the acquisition date, Mix's company stock traded at $$23\mathrm{.}50$ per share.

Revenues

Cost of goods sold

Amortization expense

Dividend income

Net income

Retained earnings, $\frac{1}{1}\frac{?}{21}$

Net income

Dividends declared

Retained earnings, $12/31/21$

Cash

Receivables

Inventory

Investment in Air Company

Copyrights

Royalty agreements

Total assets

Liabilities

Preferred Stock

Common stock

Additional paid$-$in capital

Retained earnings, $12/31/21$

Total liabilities and equity

On the date of acquisition, Air 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.$ This intangible was assumed to have a $6$ year remaining life with no residual value.

Additionally, Air owned a trademark with a fair value of $$50,000$ and a $10$ year remaining life that was not reflected in its books.

Air declared and paid dividends in the same period.Part a$.$ Figuring out Excess Amortization and Conversion to Equity Method