On January $1,2023,$ Payne Company bought a $15$ percent interest in Scout Company. The acquisition price of $$184,500$ reflected an

assessment that all of Scout's accounts were fairly valued within the company's accounting records. During $2023,$ Scout reported net

income of $$100,000$ and declared cash dividends of $$30,000.$ Payne possessed the ability to significantly influence Scout's operations

and, therefore, accounted for this investment using the equity method.

On January $1,2024,$ Payne acquired an additional $80$ percent interest in Scout and provided the following fair$-$value assessments of

Scout's ownership components:

Also, as of January $1,2024,$ Payne assessed a $$400,000$ value to an unrecorded database internally developed by Scout. The

database is anticipated to have a remaining life of four years. Scout's other assets and liabilities were judged to have fair values equal

to their book values. Payne elects to continue applying the equity method to this investment for internal reporting purposes.

At December $31,2024,$ the following financial information is available for consolidation:Total assets

Liabilities

Common stock

Additional paid$-$in capital

Retained earnings, December $31$

Total liabilities and equities

Required:

a$.$ How should Payne allocate Scout's total acquisition$-$date fair value $($January $1,2024)$ to the assets acquired and liabilities assumed

for consolidation purposes?

b$-1.$ Calculate the Equity in earnings of Scout in Payne's pre$-$consolidation $2024$ statements.

b$-2.$ Calculate the Gain on revaluation of Investment in Scout to fair value in Payne's pre$-$consolidation $2024$ statements.

b$-3.$ Calculate the Investment in Scout in Payne's pre$-$consolidation $2024$ statements.

c$.$ Prepare a worksheet to consolidate the financial statements of these two companies as of December $31,2024.$

At year$-$end, there were no intra$-$entity receivables or payables.

Complete this question by entering your answers in the tabs below.

How should Payne allocate Scout's total acquisition$-$date fair value $($January $1,2024)$ to the assets acquired and liabilities

assumed for consolidation purposes?Complete this question by entering your answers in the tabs below.

Req B$1$

Req B$2$

Req B$3$

Calculate the Equity in earnings of Scout in Payne's pre$-$consolidation $2024$ statements.Calculate the Gain on revaluation of Investment in Scout to fair value in Payne's pre$-$consolidation $2024$ statements.$\backslash$table$[[$Req A$,$Req B$1,$Req B$2]]$

Calculate the Investment in Scout in Payne's pre$-$consolidation $2024$ statements.

$\backslash$table$[[$Fair value at $1/1/24,,],[$Consideration transferred $1/1/24,,],[$Equity earnings $2024,,],[$Net income,,$],[$To database amortization,,$],[$Dividends$,,],[$Investment in Scout $12/31/24,,]]\backslash$table$[[$PAYNE AND SCOUT$],[$Consolidation Worksheet$],[$For Year Ending December $31,2024],[$Accounts$,\{$

$\backslash$table$[[$Payne$],[$Company$]]\},$Scout Company,Consolidation Entries,$\backslash$table$[[$Noncontrolling$],[$Interest$]],\backslash$table$[[$Consolidated$],[$Totals$]]],[$Debit$,$Credit$],[$Revenues$,$$$,(931,000),$$$,(380,000),,,],[$Operating expenses,,$615,000,,230,000,,,,],[$Equity earnings of Scout,,$(47,500),,0,,,,],[\backslash$table$[[$Gain on revaluation of Investment in Scout to fair$],[$value$]],,(67,500),,0,,,,],[$Separate company net income,$$,(431,000),$$$,(150,000),,,,],[$Consolidated net income$],[\backslash$table$[[$Net income attributable to noncontrolling$],[$interest$]]],[$Net income attributable to Payne Company$],[$Retained earnings, January $1,$$$,(965,000),$$$,(600,000),,,,],[$Net income,,$(431,000),,(150,000),,,?,],[$Dividends declared,,$140,000,,40,000,,,,],[$Retained earnings, December $31,$$$,1,256,000,$$$,710,000,,,,],[$Current assets,$$,288,000,"$$$,540,000,,,,],[$Investment in Scout $($equity method$),,1,672,000,,0,,,,],[$Property$,$ plant, and equipment,,$826,000,,590,000,,,,],[$Patented technology,,$850,000,,370,000,,,,],[$Database$,,0,,0,,,,],[$Goodwill$,,,,0,,,,],[$Total assets,$$,3,636,000,$$$,1,500,000,,,,]]\backslash$table$[[$Iotal assets,,$3,030,000,(,1,500,000,,,,],[$Liabilities$,$$$,(1,300,000),$$$,(90,000),,,,]$