On January $3,2022,$ Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Incorporated, in exchange for $$9,260,000$ in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Sea Cliff$$s stockholders$$ equity was $$2,610,000$ including retained earnings of $$1,810,000.$

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 $ $190,000$ $ $2,990,0007$ years

Computer software $ $90,000$ $ $3,690,00012$ 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

$2022$ $ $902,000$ $ $150,000$

$2023942,000150,000$

$2024977,000150,000$

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 $ $(2,920,000)$ $ $(2,350,000)$

Cost of goods sold $1,448,000908,000$

Depreciation expense $325,000420,000$

Amortization expense $430,00045,000$

Equity earnings in Sea Cliff $(277,000)0$

Net income $ $(994,000)$ $ $(977,000)$

Statement of Retained Earnings

Retained earnings $1/1$ $ $(7,570,000)$ $ $(3,354,000)$

Net income $($above$)(994,000)(977,000)$

Dividends declared $600,000150,000$

Retained earnings $12/31$ $ $(7,964,000)$ $ $(4,181,000)$

Balance Sheet

Current assets $ $580,000$ $ $425,000$

Investment in Sea Cliff $9,531,0000$

Computer software $400,00075,000$

Patented technology $920,000120,000$

Goodwill $140,0000$

Equipment $1,905,0004,700,000$

Total assets $ $13,476,000$ $ $5,320,000$

Liabilities $ $(3,512,000)$ $ $(339,000)$

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

Retained earnings $12/31(7,964,000)(4,181,000)$

Total liabilities and equity $ $(13,476,000)$ $ $(5,320,000)$

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.