On January 1, 2017, Hi-Speed.com acquired 100 percent of the common stock of Wi-Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Frees net assets as follows:

Page 151

Wi-Free fair value (cash paid by Hi-Speed)		$730,000
Book value of Wi-Free:
Common stock and additional paid-in capital (APIC)	$130,000
Retained earnings	370,000	500,000
Excess fair value over book value to		230,000
In-process R&D	$75,000
Computer software (overvalued)	(30,000)
Internet domain name	120,000	165,000
Goodwill		$ 65,000

At the acquisition date, the computer software had a 4-year remaining life, and the Internet domain name was estimated to have a 10-year remaining life. By the end of 2017, it became clear that the acquired in-process research and development would yield no economic benefits and Hi-Speed.com recognized an impairment loss. At December 31, 2018, Wi-Frees accounts payable included a $30,000 amount owed to Hi-Speed.

The December 31, 2018, trial balances for the parent and subsidiary follow:

	Hi-Speed.com	Wi-Free Co.
Revenues	$ (1,100,000)	$ (325,000)
Cost of goods sold	625,000	122,000
Depreciation expense	140,000	12,000
Amortization expense	50,000	11,000
Equity in subsidiary earnings	(175,500)	0
Net income	$ (460,500)	$ (180,000)
Retained earnings 1/1/18	$ (1,552,500)	$ (450,000)
Net income	(460,500)	(180,000)
Dividends declared	250,000	50,000
Retained earnings 12/31/18	$ (1,763,000)	$ (580,000)
Current assets	$ 1,034,000	$ 345,000
Investment in Wi-Free	856,000	0
Equipment (net)	713,000	305,000
Computer software	650,000	130,000
Internet domain name	0	100,000
Goodwill	0	0
Total assets	$ 3,253,000	$ 880,000
Liabilities	$ (870,000)	$ (170,000)
Common stock	(500,000)	(110,000)
Additional paid-in capital	(120,000)	(20,000)
Retained earnings 12/31/18	(1,763,000)	(580,000)
Total liabilities and equity	$ (3,253,000)	$ (880,000)

Required

Using Excel, prepare calculations showing how Hi-Speed derived the $856,000 amount for its investment in Wi-Free.

Using Excel, compute consolidated balances for Hi-Speed and Wi-Free. Either use a worksheet approach or compute the balances directly.