On January 1, 2020, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $2,007,750 cash. On the acquisition date, GaugeRite had the following balance sheet:

Cash	$	87,000		Accounts payable	$	196,000
Accounts receivable		176,000		Long-term debt		993,000
Land		738,000		Common stock		1,009,000
Equipment (net)		1,898,000		Retained earnings		701,000
Total assets	$	2,899,000		Total liabilities and equity	$	2,899,000

At the acquisition date, the following allocation was prepared:

Fair value of consideration transferred				$	2,007,750
Book value acquired					1,710,000
Excess fair value over book value					297,750
To in-process research and development	$	53,750
To equipment (8-year remaining life)		124,000			177,750
To goodwill (indefinite life)				$	120,000

Although at acquisition date Procise had expected $53,750 in future benefits from GaugeRites in-process research and development project, by the end of 2020 it was apparent that the research project was a failure with no future economic benefits.

On December 31, 2021, Procise and GaugeRite submitted the following financial statements for consolidation. There were no intra-entity payables on that date.

	Procise				GaugeRite
Sales	$	(3,538,500	)		$	(1,139,500	)
Cost of goods sold		1,690,000				675,000
Depreciation expense		324,000				148,000
Other operating expenses		216,500				36,500
Subsidiary income		(264,500	)			0
Net income	$	(1,572,500	)		$	(280,000	)
Retained earnings 1/1/21	$	(3,100,000	)		$	(888,000	)
Net income		(1,572,500	)			(280,000	)
Dividends declared		200,000				25,225
Retained earnings 12/31/21	$	(4,472,500	)		$	(1,142,775	)
Cash	$	7,725			$	29,775
Accounts receivable		842,000				183,000
Inventory		962,000				510,000
Investment in GaugeRite		2,364,775				0
Land		3,457,500				756,000
Equipment (net)		5,005,000				1,945,000
Goodwill		371,000				0
Total assets	$	13,010,000			$	3,423,775
Accounts payable	$	(285,000	)		$	(431,000	)
Long-term debt		(3,102,500	)			(841,000	)
Common stock		(5,150,000	)			(1,009,000	)
Retained earnings 12/31/21		(4,472,500	)			(1,142,775	)
Total liabilities and equity	$	(13,010,000	)		$	(3,423,775	)

a. Show how Procise derived its December 31, 2021, Investment in GaugeRite account balance.

c. Prepare a consolidated worksheet for Procise and GaugeRite as of December 31, 2021.

Complete this question by entering your answers in the tabs below. Required A Required C Show how Procise derived its December 31, 2021, Investment in GaugeRite account balance. (Amounts to be deducted should be indicated by a minus sign.) Amounts Consideration transferred 1/1/20 Investment balance 12/31/21 $ 0 Required A Required C Accounts Consolidated Totals Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Procise and Subsidiary Gauge Rite Consolidated Worksheet for the year ended December 31, 2021 Consolidation Entries 12/31/21 12/31/21 Debit Credit Procise GaugeRite $ (3,538,500) $ (1,139,500) 1,690,000 675,000 324,000 148,000 216,500 36,500 (264,500) 0 $ (1,572,500) $ 280,000 Net Income Retained earnings 1/1/21 Net Income $ (3,100,000) $ (888,000) (1,572,500) (280,000) 200,000 25,225 $ (4,472,500) $ (1,142,775) Dividends declared Retained earnings 12/31/21 Cash $ 7,725 $ 29,775 183,000 842,000 962,000 510,000 2,364,775 0 Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill 756,000 1,945,000 3,457,500 5,005,000 371,000 $ 13,010,000 0 Total assets $ 3,423,775 $ 14,282,000 Accounts payable Long-term debt Common stock-Procise Common stock-Gauge Rite Retained earnings 12/31/21 Total liabilities and equity $ (285,000) $ (431,000) (3,102,500) (841,000) (5,150,000) (1,009,000) (4,472,500) (1,142,775) $(13,010,000) $ (3,423,775) $ 0 $ 0 $ 14,282,000