Kelsey Corporation acquired 100 percent of Snowdon Companys outstanding common stock on January 1 for $700,400 in cash. Snowdon reported net assets with a carrying amount of $440,000 at that time. Some of Snowdons assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows:

AssetBook ValuesFair ValuesTrademarks (indefinite life)$ 94,500$ 238,500Software (5-year remaining life)075,000Equipment (10-year remaining life)352,000310,300

No impairment charges occurred during the year.

The following are financial statements at the end of the first year for these two companies prepared from their separately maintained accounting systems. Snowdon declared and paid dividends in the same period. Credit balances are indicated by parentheses.

AccountsKelseySnowdonRevenues$ (1,725,000)$ (676,000)Cost of goods sold460,000306,000Depreciation expense104,40072,600Amortization expense34,8000Income from Snowdon(286,570)0Net income$ (1,412,370)$ (297,400)Retained earnings, 1/1$ (796,000)$ (340,000)Net income(1,412,370)(297,400)Dividends declared167,000105,000Retained earnings, 12/31$ (2,041,370)$ (532,400)Cash$ 203,000$ 154,500Receivables294,00074,700Inventory181,000205,000Investment in Snowdon881,9700Trademarks516,00069,900Software00Equipment (net)932,000324,000Goodwill00Total assets$ 3,007,970$ 828,100Liabilities$ (566,600)$ (195,700)Common stock(400,000)(100,000)Retained earnings, 12/31(2,041,370)(532,400)Total liabilities and equity$ (3,007,970)$ (828,100)

Required:

1)Which investment method did Kelsey use to compute the $286,570 income from Snowdon?

2) Determine the totals to be reported for this business combination for the year ending December 31.

3)Verify the totals determined in part (b) by producing a consolidation worksheet for Kelsey and Snowdon for the year ending December 31.

what is the amortization that you got for #2 as well and how did you get it?

No impairment charges occurred during the year. The following are financial statements at the end of the first year for these two companies prepared accounting systems. Snowdon declared and paid dividends in the same period. Credit balances are No impairment charges occurred during the year. The following are financial statements at the end of the first year for these two companies prepared accounting systems. Snowdon declared and paid dividends in the same period. Credit balances are