On January $1,2020,$ Corgan Company acquired $80$ percent of the outstanding voting stock of Smashing, Inc., for a total of $$1,560,000$

in cash and other consideration. At the acquisition date, Smashing had common stock of $$900,000,$ retained earnings of $$450,000,$

and a noncontrolling interest fair value of $$390,000.$ Corgan attributed the excess of fair value over Smashing's book value to various

covenants with a $20-$year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a $60$ percent markup on cost$.$ At the end of $2020$ and $2021,40$ percent of the current year

purchases remain in Smashing's inventory.

a$.$ Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December $31,2021.$

b$.$ Prepare the worksheet adjustments for the December $31,2021,$ consolidation of Corgan and Smashing.

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Required B

Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December $31,2021.$