On January $3,2022,$ Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Incorporated, in exchange for $$7,304,000$ in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Sea Cliff$$s stockholders$$ equity was $$2,544,000$ including retained earnings of $$1,744,000.$

Persoff pursued the acquisition, in part, to utilize Sea Cliff$$s technology and computer software. These items had fair values that differed from their values on Sea Cliff$$s books as follows:

Asset Book Value Fair Value Remaining Useful Life

Patented technology $ $160,000$ $ $2,540,0007$ years

Computer software $ $72,000$ $ $2,232,00012$ years

Sea Cliff$$s remaining identifiable assets and liabilities had acquisition$-$date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff reported the following income and dividends:

Year Net Income Dividends

$2022$ $ $900,800$ $ $150,000$

$2023940,800150,000$

$2024975,800150,000$

December $31,2024,$ financial statements for each company follow. Parentheses indicate credit balances. Dividends declared were paid in the same period.

Items Persoff Sea Cliff

Income Statement

Revenues $ $(2,800,000)$ $ $(2,290,000)$

Cost of goods sold $1,389,200885,200$

Depreciation expense $295,000396,000$

Amortization expense $394,00033,000$

Equity earnings in Sea Cliff $(455,800)0$

Net income $ $(1,177,600)$ $ $(975,800)$

Statement of Retained Earnings

Retained earnings $1/1$ $ $(7,510,000)$ $ $(3,285,600)$

Net income $($above$)(1,177,600)(975,800)$

Dividends declared $600,000150,000$

Retained earnings $12/31$ $ $(8,087,600)$ $ $(4,111,400)$

Balance Sheet

Current assets $ $526,000$ $ $395,000$

Investment in Sea Cliff $8,111,4000$

Computer software $340,00057,000$

Patented technology $848,00096,000$

Goodwill $116,0000$

Equipment $1,863,0004,580,000$

Total assets $ $11,804,400$ $ $5,128,000$

Liabilities $ $(1,716,800)$ $ $(216,600)$

Common stock $(2,000,000)(800,000)$

Retained earnings $12/31(8,087,600)(4,111,400)$

Total liabilities and equity $ $(11,804,400)$ $ $(5,128,000)$

Required:

Determine the fair value in excess of book value for Persoff's acquisition date investment in Sea Cliff.

Determine Persoff's Equity earnings in Sea Cliff's balance for the year ended December $31,2024.$

Determine Persoff's December $31,2024,$ Investment in Sea Cliff's balance.

Prepare a worksheet to determine the consolidated values to be reported on Persoff$$s financial statements.