On January $1,2022,$ Lion provides a loan for $$3,500,000$ to Wolf. The terms of the loan require payment of the loan no later than January $1,2027.$ The terms of the loan agreement include provisions that require Wolf to provide Lion with the following from January $1,2022$ through January $1,2027$: $($i$)8\%$ annual interest on the principal amount of the loan, which reflects a market rate of interest; $($ii$)$ management fee of $40\%$ of annual sales; and $($iii$)$ complete decision$-$making authority over RMC$\text{'}$s operations and financing decisions.

At the date the loan was extended to Wolf, Wolf's common stock had an estimated fair value of $$636,000$ and a book value of $$96,000.$ The difference was attributed to an asset with a $6-$ year useful life remaining $("$Asset$").$ At December $31,2022,$ the financial statements for Lion and Wolf are as follows:

Assets

Lion

Wolf

Cash

$97,000$

$78,000$

Accounts receivable

$137,000$

$765,000$

Loan receivable from Wolf

$3,500,000$

Asset with $6-$year life remaining

$96,000$

Equipment $($net$)$

$3,187,000$

$2,834,000$

Total assets

$6,921,000$

$3,773,000$

Liabilities and Owners' Equity

Accounts payable

$(519,000)$

$(233,000)$

Long$-$term debts

$(988,000)$

$(3,500,000)$

Common stock

$(4,800,000)$

$(34,000)$

Retained earnings, $12/31/21$

$(814,000)$

$(6,000)$

Total Liab and Owners' Equity

$(6,921,000)$

$(3,773,000)$

Sales

$2,896,000$

$1,950,000$

Cost of goods sold

$1,296,000$

$1,075,000$

Operating expenses

$745,000$

$205,000$

Management Fees

$340,000$

Management Fee Income

$(340,000)$

Interest expense

$280,000$

Interest income

$(280,000)$

Prepare the $12/31/2022$ eliminating journal entries with respect to the variable interest entity. On January $1,2022,$ Lion provides a loan for $\backslash (\backslash$$ $3,500,000\backslash )$ to Wolf. The terms of the loan require payment of the loan no later than January $1,2027.$ The terms of the loan agreement include provisions that require Wolf to provide Lion with the following from January $1,2022$ through January $1,2027$: $($i$)\backslash (8\backslash \%\backslash )$ annual interest on the principal amount of the loan, which reflects a market rate of interest; $($ii$)$ management fee of $\backslash (40\backslash \%\backslash )$ of annual sales; and $($iii$)$ complete decision$-$making authority over RMC$\text{'}$s operations and financing decisions.

At the date the loan was extended to Wolf, Wolf's common stock had an estimated fair value of $\backslash (\backslash$$ $636,000\backslash )$ and a book value of $\backslash (\backslash$$ $96,000\backslash ).$ The difference was attributed to an asset with a $6$year useful life remaining $("$Asset$").$ At December $31,2022,$ the financial statements for Lion and Wolf are as follows:

Sales

Cost of goods sold

Operating expenses

Management Fees

Management Fee Income

Interest expense

Interest income

$\backslash ((280,000)\backslash )$