On January 1, 2014, Picante Corporation acquired 100 percent of the outstanding voting stock of Salsa Corporation for $1,835,000 cash. On the acquisition date, Salsa had the following balance sheet:

Cash	$	63,000		Accounts payable	$	178,000
Accounts receivable		177,000		Long-term debt		1,007,000
Land		708,000		Common stock		1,017,000
Equipment (net)		1,930,000		Retained earnings		676,000
	$	2,878,000			$	2,878,000

At the acquisition date, the following allocation was prepared:

Fair value of consideration transferred			$	1,835,000
Book value acquired				1,693,000
Excess fair value over book value				142,000
To in-process research and development	$	67,500
To equipment (8-year remaining life)		59,200		126,700
To goodwill (indefinite life)			$	15,300

Although at acquisition date Picante had expected $67,500 in future benefits from Salsas in-process research and development project, by the end of 2014, it was apparent that the research project was a failure with no future economic benefits.

On December 31, 2015, Picante and Salsa submitted the following trial balances for consolidation. There were no intra-entity payables on that date.

		Picante			Salsa
Sales	$	(3,740,400	)	$	(1,158,500	)
Cost of goods sold		1,760,000			722,500
Depreciation expense		563,000			166,000
Subsidiary income		(262,600	)		0
Net income	$	( 1,680,000	)	$	(270,000	)
Retained earnings 1/1/15	$	(3,160,000	)	$	(855,000	)
Net income		(1,680,000	)		(270,000	)
Dividends declared		100,000			25,425
Retained earnings 12/31/15	$	(4,740,000	)	$	(1,099,575	)
Cash	$	174,225		$	59,575
Accounts receivable		910,000			216,000
Inventory		920,000			649,000
Investment in Salsa		2,176,275			0
Land		3,642,500			775,000
Equipment (net)		5,230,000			1,760,000
Goodwill		305,000			0
Total assets	$	13,358,000		$	3,459,575
Accounts payable	$	(233,000	)	$	(452,000	)
Long-term debt		(3,235,000	)		(891,000	)
Common stock		(5,150,000	)		(1,017,000	)
Retained earnings 12/31/15		(4,740,000	)		(1,099,575	)
Total liabilities and equities	$	(13,358,000	)	$	(3,459,575	)

Note: Parentheses indicate a credit balance.

a.	Determine the investment in Salsa account balance as on December 31, 2015. (Amounts to be deducted should be indicated by a minus sign.)

Consideration transfeered 1/1/14
Dividends declared 2015
In-process R&D write-off in 2014
Amoritization 2014
Amortization 2015
Increase in Salsas retained earnings to1/1/15
Income 2015
Investment balance 12/31/15

c.

Prepare a consolidated worksheet for Picante and Salsa as of December 31, 2015. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

Accounts	Picante	Salsa	Consolidation Debit	Entires Credit	Consolidated Totals
Sales	(3,740,400)	(1,158,500)
COGS	1,760,000	722,500
Depreciation Expense	563,000	166,000
Subsidiary income	(262,600)	0
Net Income	(1,680,000)	(270,000)
Retained earning 1/1/15	(3,160,000)	(855,000)
Net Income	(1,680,000)	(270,000)
Dividends Declared	100,000	25,425
Retained Earnings 12,21,15	(4,740,000)	(1,099,575)
Cash	174,225	59,575
Accounts Receivable	910,000	216,000
Inventory	920,000	649,000
Investment in Salsa	2,176,275	0
Land	3,642,500	775,000
Equipment	5,230,000	1,760,000
Goodwill	305,000	0
Total Assets	13,358,000	3,459,575
Accounts Payable	(233,000)	(452,000)
Long-Term Debt	(3,235,000)	(891,000)
Common Stock- Picante	(5,150,000)
Common Stock- Salsa		(1,017,000)
Retained Earnings 12/31/15	(4,740,000)	(1,099,575)
Total Liabilities	(13,358,000)	(3,459,575)