On January 3, 2016, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc. in exchange for $6,978,000 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 Cliffs stockholders equity was $2,533,000 including retained earnings of $1,733,000.

On January 3, 2016, Persoff Corporation acqulred all of the outstanding voting stock of Sea Cliff, Inc. In exchange for $6,978,000 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 $2,533,000 Including retalned earnings of $1,733,000 Persoff pursued the acquisition, In part, to utililze Sea Clff's technology and computer software. These Items had fair values that differed from thelr values on Sea Clff's books as follows: Book Value Fair Value 155,808 2,465,9e8 1,989,8e8 Remaining Useful Life 7 years 12 yearS Asset Patented technology Computer software 69,8e8 Sea Cliff's remalning identifiable assets and labilities had acquisition-date book values that closely approximated falr values. SInce acquisition, no assets have been Impalred. During the next three years, Sea Cliff reported the following Income and dIvidends: 2816 2817 2018 Net Income $ 98e,6e8 948,688 975,688 Dividends s 15e,8ee 15e,808 15e,808 December 31, 2018, financial statements for each company appear below. Parentheses Indicate credit balances. Dividends declared were pald In the same perlod. Persoff Sea Cliff Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity earnings in Sea Cliff Net income $ (2,78e,8e8) 1,379,488 298,8e8 388,888 (485,68e) $ (1,208,288) $ (2,288,800) 881,488 392,808 31,980 $ (975,688) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared $(7,58e,888) (1,288,288) $(3,274,288) (975,688) 68e,8e8 15e,888 $ (8,188,288) $(4,899,888) Retained earnings 12/31 Balance Sheet Current assets Investment in Sea cliff Computer software Patented technology Goodwil Equipment Total assets Liabilities Common stock Retained earnings 12/31 517,808 7,874,8ee 338,808 836,8e8 112,eee 1,856,8ee s11,525,888 (1,417,688) $39e,888 54,8e8 92,8e8 4,56e,8ee $ 5,896,888 (2,888,888) 8,188,288) $(11,525,808) (196,288) (888,8e8) 4,899,888) $(5,896,8e8) Total liabilities and equity Note: Parentheses Indicate a credit balance a. Determine the falr value In excess of book value for Persoff's acquisition date Investment In Sea Cliff. b. Determine Persoff's Equity earnings In Sea Cliff's balance for the year ended December 31, 2018. c. Determlne Persoff's December 31, 2018, Investment In Sea Cliff's balance d. Prepare a worksheet to determine the consolidated values to be reported on Persoff's financial statements. Complete this question by entering your answers in the tabs below Required A Required BRequired Required D Determine the fair value in excess of book value for Persoff's acquisition date investment in Sea Cliff. Fair value in excess of book value Complete this question by entering your answers in the tabs below Required ARequired BRequired C Required D Determine Persoff's Equity earnings in Sea Cliff'sbalance for the year ended December 31, 2018. Equity earnings in Sea Cliff Complete this question by entering your answers in the tabs below Required A Required B Required CRequired D Determine Persoff's December 31, 2018, Investment in Sea Cliff's balance. Investment in Sea Cliff PERSOFF AND CON SOLIDATED SUBSIDIARY For Year December 31, 2018 Persoff Sea Cliff Credit Totals Revenues (2,780,000)(2,280,000) Equity earnings in Sea Cliff (1.208,200)(975,800) Statement of Retained Earnings (7,500,000)(3,274,200) (1,208.200) Dividends declared earnings 12/31 5 (8,108,200 (4,099,800) Investment in Sea Cliff Computer software Patented technology 5 11,525,800 5,098,000 Retained earnings 1 231 equity (11,525,800) (5,096,000)