Note: Parentheses indicate a credit balance. A. Determine the fair value in excess of book value for Persoff's acquisition date investment in Sea Cliff. B. Determine Persoff's Equity earnings in Sea Cliff's balance for the year ended December 31, 2018. C. Determine Persoff's December 31, 2018, Investment in Sea Cliff's balance. D. Prepare a worksheet to determine the consolidated values to be reported on Persoffs financial statements.

On January 3, 2016, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc. in exchange for $9,749,000 it cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 fiscal year-ends. At the acquisition date, Sea Cliff's stockholders' equity was $2,626,500 including retained earnings of $1,826,500 Persoff pursued the acquisition, in part, to utilize Sea Cliff's technology and computer software. These items had fair values that differed from their values on Sea Cliff's books as follows: Book Value $ 197,500 94,500 Fair Value 3,102,500 4,054,500 Remaining Useful Life 7 years 12 years Asset Patented technology Computer software Sea Cliff's remaining identifiable assets and liabilities had acquisition-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff reported the following income and dividends 2016 2017 2018 Net Income Dividends 150,000 150,000 150,000 $ 902,300 942,300 977,300 December 31, 2018, financial statements for each company appear below. Parentheses indicate credit balances. Dividends declared were paid in the same period Persoff Sea Cliff Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity earnings in Sea Cliff Net income Statement of Retained Earnings Retained earnings 1/.1 Net income (above) Dividends declared $ (2,950,000) $ (2,365,000) 1 , 462 , 700 332,500 439,000 232,300 913,700 426, 000 48,000 $(948,100) $ (977,300) $ (7,585, 000) (948,100) $ (3,371,100) (977,300) 150,000 600,000 $ (7,933,100) $ (4,198,400) Retained earnings 12/31 Balance Sheet Current assets Investment in Sea Cliff Computer software Patented technology Goodwill Equipment Total assets Liabilities Common stock Retained earnings 12/31 Total 1iabilities and equity 593,500 9,885, 900 415,000 938,000 146,000 1,915,500 13,893,900 s (3,960,800) $ 432,500 79,500 126,000 4,730,000 $ 5,368,000 $ (369,600) 4,198,400 $ (5,368,000) (2,000,000) (800,000) (7,933,100 $ (13,893,900) Required ARequired B Required C Required D Determine the fair value in excess of book value for Persoff's acquisition date investment in Sea Cliff. Fair value in excess of book value Determine Persoff's Equity earnings in Sea Cliff's balance for the year ended December 31, 2018. Equity earnings in Sea Cliff Determine Persoff's December 31, 2018, Investment in Sea Cliff's balance. Investment in Sea Cliff Prepare a worksheet to determine the consolidated values to be reported on Persoff's financial statements. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.) PERSOFF CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year December 31, 2018 Consolidation Entries Consolidated Totals Accounts Persof Sea Cliff Debit Credit Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity earnings in Sea Cliff $ (2,950,000)$ (2,365,000) 913,700 426,000 48,000 1,462,700 332,500 439,000 (232,300) Net income $ (948,100)$977,300) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared (7,585,000)(3,371,100) (977,300) 150,000 $ (7,933,100)$ (4,198,400) (948,100) 600,000 Retained earnings 12/31 Balance Sheet Current assets Investment in Sea Cliff Computer software Patented technology Goodwill Equipment $ 593,500 $432,500 9,885,900 415,000 938,000 146,000 1,915,500 79,500 126,000 4,730,000 $ 13,893,900$ 5,368,000 Total assets (3,960,800) (2,000,000) (7,933,100)(4,198,400) 13,893,900$ (5,368,000) Liabilities Common stock Retained earnings 12/31 (369,600) (800,000) Total liabilities and equity