On January 1, 2020, Pinnacle Corporation exchanged $3,646,500 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: Cash Accounts receivable Inventory Buildings (net) Licensing agreements Total assets, $ 252,000 324,000 Accounts payable Long-term debt S 402,000 2,950,000 381,000 Common stock 1,500,000 2,100,000 Retained earnings 1,520,000 3,315,000 Total liabilities and $6,372,000 $6,372,000 equity Pinnacle prepared the following fair-value allocation: Fair value of Strata (consideration transferred) Carrying amount acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) $ 372,000 (149,000) $3,646, 500 3,020,000 $ 620,500 223,000 $ 403,500 At the acquisition date, Strata's buildings had a 10-year remaining life and its licensing agreements were due to expire in 5 years. On December 31, 2021, Strata's accounts payable included an $90,400 current liability owed to Pinnacle. Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata. ine separate financial statements for the two companies for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Sales Cost of goods sold Interest expense Depreciation expense Amortization expense Dividend income Net income Retained earnings 1/1/21 Net income Dividends declared Retained Earnings 12/31/21 Cash Accounts receivable. Inventory Investment in Strata Buildings (net) Licensing agreements: Goodwill Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31/21 Total Liabilities and Owner's Pinnacle Strata $ (7,622,000) $ (3,619,000) 5,000,000 261,000 611,000 (50,000) $ (1,800,000) $ 2,110,000 224,000 431,000 663,000 (191,000) (191,000) $ (5,420,000) $ (1,804, 400) (1,800,000) 560,000 50,000 $ (6,660,000) $ (1,945, 400) $ 221,000 $ 388, 900 1,660,000 1,150,000 3,646,500 5,995,000 402,500 $ 13,075,000 $ 332, 500 1,480,000 2,230,000 1,989,000 $ 6,420, 400 (445,000) $ (745,000) (2,970,000) (2,230,000) (3,000,000) (1,500,000) (6,660,000) (1,945, 400) $(13,075,000) $ (6,420,400) Required A Required B Required C Prepare a worksheet to consolidate the financial information for these two companies. (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. Amounts in the Debit and Credit columns should be entered as positive. Input all amounts as positive values.) PINNACLE COMPANY AND SUBSIDIARY STRATA Consolidation Worksheet For Year December 31, 2021 Show less Consolidation Entries Consolidated Accounts Pinnacle Strata Debit Credit Totals Sales $ (7,622,000) $ (3,619,000)| Cost of goods sold Interest expense Depreciation expense Amortization expense Dividend income Net income (50,000) $ (1,800,000) $ 5,000,000 2,110,000 261,000 224,000 611,000 431,000 663,000 (191,000) Detail minne 1/1/71 130 SOA AND Retained earnings 1/1/21 Net income Dividends declared (5,420,000) (1,804,400) (1,800,000) (191,000) 560,000 50,000 Retained earnings 12/31/21 $ (6,660,000) $ (1,945,400) Cash Accounts receivable Inventory Investment in Strata $ 221,000 $ 388,900 1,660,000 332,500 1,150,000 1,480,000 3,646,500 5,995,000 2,230,000 1,989,000 Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock-Pinnacle Common stock Strata Retained earnings 12/31/21 402,500 $ 13,075,000 $6,420,400 (445,000) (745,000) (2,970,000) (2,230,000) (3,000,000) (1,500,000) (6,660,000) (1,945,400) Total Liabilities and Owner's Equity $ (13,075,000) $ (6,420,400) S Required A Required B Required C Compute the following amounts that would appear on Pinnacle's 2021 separate (nonconsolidated) financial records if Pinnacle's investment accounting was based on the equity method: (Input all amounts as positive values.) 1 Subsidiary income 2 Retained earnings 1/1/21 3 Investment in Strata Amounts