On January 1, 2017, Paloma Corporation exchanged $1,710,000 cash for 90 percent of the outstanding voting stock of San Marco Company. The consideration transferred by Paloma provided a reasonable basis for assessing the total January 1, 2017, fair value of San Marco Company. At the acquisition date, San Marco reported the following owners' equity amounts in its balance sheet: Common stock Additional paid-in capital Retained earnings $400,000 60,000 265,000 In determining its acquisition offer, Paloma noted that the values for San Marco's recorded assets and liabilities approximated their fair values. Paloma also observed that San Marco had developed internally a customer base with an assessed fair value of $800,000 that was not reflected on San Marco's books. Paloma expected both cost and revenue synergies from the combination. At the acquisition date, Paloma pre pared the following fair-value allocation schedule Fair value of San Marco Company Book value of San Marco Company Excess fair value s 1,900,000 725,000 1,175,ee0 800,000 S 375,080 to customer base (10-year remaining life) to goodwill At December 31, 2018, the two companies report the following balances: Paloma San Marco Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of San Marco (1,843,000) S (675,000) 322,000 120,000 11,000 7,000 1,100,000 125,000 275,000 27,500 Net income S (437,000) (215,000) Retained earnings, 1/1 Net income Dividends declared S (2,625,000) (395,000) (215,000) 25,000 S (2,712,000) (585,000) (437,000) 350,000 Retained earnings, 12/31 Current assets Investment in San Marco Buildings and equipment Copyrights S 1,284,000 1,854,000 931,000 950,000 S 4,939,000 430,000 863,000 107,000 1,400,900 Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, 12/31 S (485,000) S (200,000) (155,000) (400,000) (60,000) (2,712,000) (585,000) S (4,939,000) (1,400,000) (542,000) (900,000) (300,000) Total liabilities and equities At year-end, there were no intra-entity receivables or payables a. Determine the consolidated balances for this business combination as of December 31, 2018. b. If instead the noncontrolling interest's acquisition-date fair value is assessed at $167,500, what changes would be evident in the consolidated statements