On January 1, 2023, Palo Verde Corporation acquired 100 percent of the voting stock of Silverstone Corporation in exchange for $2,220,500 in cash and securities. On the acquisition date, Silverstone had the following balance sheet: Cash $ 30,400 Accounts payable $ 1,306,400 Accounts receivable 89,000 Inventory 149,000 Equipment (net) 1,690,000 Common stock 800,000 Trademarks 946,000 Retained earnings 798,000 Total assets $ 2,904,400 Total liabilities and equity $ 2,904,400 At the acquisition date, the book values of Silverstones assets and liabilities were generally equivalent to their fair values except for the following assets: Asset Book Value Fair Value Remaining Useful Life Equipment $ 1,690,000 $ 1,813,000 8 years Royalty agreements 0 170,000 4 years Trademarks 946,000 1,033,500 indefinite During the next two years, Silverstone has the following income and dividends in its own separately prepared financial reports to its parent. Year Net Income Dividends 2023 $ 191,000 $ 25,000 2024 411,000 45,000 Dividends are declared and paid in the same period. The December 31, 2024, separate financial statements for each company follow. Parentheses indicate credit balances. Items Palo Verde Silverstone Income Statement Revenues $ (5,540,000) $ (2,757,000) Cost of goods sold 2,970,000 1,910,000 Depreciation expense 559,000 436,000 Amortization expense 137,000 0 Equity earnings in Silverstone (353,125) 0 Net income $ (2,227,125) $ (411,000) Statement of Retained Earnings Retained earnings, 1/1 $ (3,800,000) $ (964,000) Net income (above) (2,227,125) (411,000) Dividends declared 150,000 45,000 Retained earnings, 12/31 $ (5,877,125) $ (1,330,000) Balance Sheet Cash $ 558,000 $ 55,000 Accounts receivable 770,000 122,000 Inventory 965,000 512,000 Investment in Silverstone 2,636,750 0 Equipment 6,260,000 1,725,000 Royalty agreements 141,000 0 Trademarks 3,280,000 938,000 Goodwill 256,000 0 Total assets $ 14,866,750 $ 3,352,000 Accounts payable $ (489,625) $ (1,222,000) Common stock (8,500,000) (800,000) Retained earnings, 12/31 (5,877,125) (1,330,000) Total liabilities and equity $ (14,866,750) $ (3,352,000) Required: Determine the fair value in excess of book value for Palo Verdes acquisition date investment in Silverstone. Determine Palo Verde's December 31, 2024, Investment in Silverstone balance. Prepare a worksheet to determine the balances for Palo Verde's December 31, 2024, consolidated financial statements. PrevQuestion 1 of 8 Total1 of 8Visit question mapNext