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On January 3 , 2 0 2 2 , Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Incorporated, in exchange for

On January 3,2022, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Incorporated, in exchange for $10,075,000 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 $2,637,500 including retained earnings of $1,837,500.
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:
\table[[Asset,Book Value,Fair Value,\table[[Remaining],[Useful Life]]],[Patented technology,$202,500,$3,177,500,7 years],[Computer software,$97,500,$4,297,500,12 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:
\table[[Year,Net Income,Dividends],[2022,$902,500,$150,000
Assignment (i)
\table[[Balance Sheet,$602,500,$437,500
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