On January 1, 2023, Palo Verde Corporation acquired 100 percent of the voting stock of Silverstone Corporation in exchange for $2,342,000 in cash and securities. On the acquisition date, Silverstone had the following balance sheet:

Cash	$ 31,800	Accounts payable	$ 1,894,300
Accounts receivable	117,500
Inventory	147,000
Equipment (net)	2,320,000	Common stock	800,000
Trademarks	952,000	Retained earnings	874,000
Total assets	$ 3,568,300	Total liabilities and equity	$ 3,568,300

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	$ 2,320,000	$ 2,515,000	8 years
Royalty agreements	0	215,000	4 years
Trademarks	952,000	1,047,000	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	$ 253,000	$ 25,000
2024	466,000	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	$ (4,420,000)	$ (3,166,000)
Cost of goods sold	2,410,000	2,240,000
Depreciation expense	513,000	460,000
Amortization expense	178,000	0
Equity earnings in Silverstone	(387,875)	0
Net income	$ (1,706,875)	$ (466,000)
Statement of Retained Earnings
Retained earnings, 1/1	$ (3,600,000)	$ (1,102,000)
Net income (above)	(1,706,875)	(466,000)
Dividends declared	150,000	45,000
Retained earnings, 12/31	$ (5,156,875)	$ (1,523,000)
Balance Sheet
Cash	$ 504,000	$ 82,000
Accounts receivable	810,000	81,000
Inventory	942,000	516,000
Investment in Silverstone	2,834,750	0
Equipment	6,640,000	1,785,000
Royalty agreements	118,000	0
Trademarks	3,070,000	946,000
Goodwill	213,000	0
Total assets	$ 15,131,750	$ 3,410,000
Accounts payable	$ (1,474,875)	$ (1,087,000)
Common stock	(8,500,000)	(800,000)
Retained earnings, 12/31	(5,156,875)	(1,523,000)
Total liabilities and equity	$ (15,131,750)	$ (3,410,000)

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.

Determine the fair value in excess of book value for Palo Verdes acquisition date investment in Silverstone.

	Fair value in excess of book value

Determine Palo Verde's December 31, 2024, Investment in Silverstone balance.

	Amounts
Investment in Silverstone balance at 12/31/24

Prepare a worksheet to determine the balances for Palo Verde's December 31, 2024, consolidated financial statements.

Note: 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. Input all amounts as positive values.

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PALO VERDE CORPORATION AND CONSOLIDATED SUBSIDIARY
Consolidation Worksheet
For Year December 31, 2024
Accounts	Palo Verde	Silverstone	Consolidation Entries	Consolidated Totals
Debit	Credit
Income Statement
Revenues	$(4,420,000)	$(3,166,000)
Cost of goods sold	2,410,000	2,240,000
Depreciation expense	513,000	460,000
Amortization expense	178,000	0
Equity earnings in Silverstone	(387,875)	0
Net income	$(1,706,875)	$(466,000)
Statement of Retained Earnings
Retained earnings 1/1	(3,600,000)	(1,102,000)
Net income (above)	(1,706,875)	(466,000)
Dividends declared	150,000	45,000
Retained earnings 12/31	$(5,156,875)	$(1,523,000)
Balance Sheet
Cash	$504,000	$82,000	586,000
Accounts receivable	810,000	81,000	891,000
Inventory	942,000	516,000	1,458,000
Investment in Silverstone	2,834,750	0	2,834,750
Equipment (net)	6,640,000	1,785,000	8,425,000
Royalty agreements	118,000	0	118,000
Trademarks	3,070,000	946,000	4,016,000
Goodwill	213,000	0	213,000
Total assets	$15,131,750	$3,410,000
Accounts payable	(1,474,875)	(1,087,000)
Common stock - Palo Verde	(8,500,000)
Common stock - Silverstone		(800,000)
Retained earnings 12/31	(5,156,875)	(1,523,000)
Total liabilities and equity	$(15,131,750)	$(3,410,000)	$18,541,750	$