On January $1,2023,$ Palo Verde Corporation acquired $100$ percent of the voting stock of Silverstone Corporation in exchange for $$2,341,500$ in cash and securities$.$ On the acquisition date, Silverstone had the following balance sheet:

Cash $ $26,400$ Accounts payable $ $1,854,900$

Accounts receivable $102,500$

Inventory $216,000$

Equipment $($net$)2,170,000$ Common stock $800,000$

Trademarks $1,016,000$ Retained earnings $876,000$

Total assets $ $3,530,900$ Total liabilities and equity $ $3,530,900$

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 $ $2,170,000$ $ $2,374,0008$ years

Royalty agreements $0176,0004$ years

Trademarks $1,016,0001,068,500$ 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

$2023$ $ $208,000$ $ $25,000$

$2024244,00045,000$

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 $ $(5,680,000)$ $ $(2,284,000)$

Cost of goods sold $3,040,0001,610,000$

Depreciation expense $542,000430,000$

Amortization expense $130,0000$

Equity earnings in Silverstone $(174,500)0$

Net income $ $(2,142,500)$ $ $(244,000)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(3,140,000)$ $ $(1,059,000)$

Net income $($above$)(2,142,500)(244,000)$

Dividends declared $150,00045,000$

Retained earnings, $12/31$ $ $(5,132,500)$ $ $(1,258,000)$

Balance Sheet

Cash $ $588,000$ $ $75,000$

Accounts receivable $748,00089,500$

Inventory $913,000616,000$

Investment in Silverstone $2,584,5000$

Equipment $6,400,0001,717,500$

Royalty agreements $144,0000$

Trademarks $3,050,000864,000$

Goodwill $249,0000$

Total assets $ $14,676,500$ $ $3,362,000$

Accounts payable $ $(1,044,000)$ $ $(1,304,000)$

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

Retained earnings, $12/31(5,132,500)(1,258,000)$

Total liabilities and equity $ $(14,676,500)$ $ $(3,362,000)$

Required:

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

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

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