On January $1,2023,$ Palo Verde Corporation acquired $100$ percent of the voting stock of Silverstone Corporation in exchange for $$2,342,000$ in cash and securities$.$ On the acquisition date, Silverstone had the following balance sheet:

Cash $ $31,800$ Accounts payable $ $1,894,300$

Accounts receivable $117,500$

Inventory $147,000$

Equipment $($net$)2,320,000$ Common stock $800,000$

Trademarks $952,000$ Retained earnings $874,000$

Total assets $ $3,568,300$ Total liabilities and equity $ $3,568,300$

At the acquisition date, the book values of Silverstone$$s assets and liabilities were generally equivalent to their fair values except for the following assets:

Asset Book Value Fair Value Remaining Useful Life

Equipment $ $2,320,000$ $ $2,515,0008$ years

Royalty agreements $0215,0004$ years

Trademarks $952,0001,047,000$ indefinite

During the next two years, Silverstone has the following income and dividends in its own separately prepared financial reports to its parent.

Year Net Income Dividends

$2023$ $ $253,000$ $ $25,000$

$2024466,00045,000$

Dividends are declared and paid in the same period. The December $31,2024,$ separate financial statements for each company follow. Parentheses indicate credit balances.

Items Palo Verde Silverstone

Income Statement

Revenues $ $(4,420,000)$ $ $(3,166,000)$

Cost of goods sold $2,410,0002,240,000$

Depreciation expense $513,000460,000$

Amortization expense $178,0000$

Equity earnings in Silverstone $(387,875)0$

Net income $ $(1,706,875)$ $ $(466,000)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(3,600,000)$ $ $(1,102,000)$

Net income $($above$)(1,706,875)(466,000)$

Dividends declared $150,00045,000$

Retained earnings, $12/31$ $ $(5,156,875)$ $ $(1,523,000)$

Balance Sheet

Cash $ $504,000$ $ $82,000$

Accounts receivable $810,00081,000$

Inventory $942,000516,000$

Investment in Silverstone $2,834,7500$

Equipment $6,640,0001,785,000$

Royalty agreements $118,0000$

Trademarks $3,070,000946,000$

Goodwill $213,0000$

Total assets $ $15,131,750$ $ $3,410,000$

Accounts payable $ $(1,474,875)$ $ $(1,087,000)$

Common stock $(8,500,000)(800,000)$

Retained earnings, $12/31(5,156,875)(1,523,000)$

Total liabilities and equity $ $(15,131,750)$ $ $(3,410,000)$

Required:

Determine the fair value in excess of book value for Palo Verde$$s acquisition date investment in Silverstone.

Determine Palo Verde's December $31,2024,$ Investment in Silverstone balance.

Prepare a worksheet to determine the balances for Palo Verde's December $31,2024,$ consolidated financial statements.