On January 3, 2018, Rome acquired all of the outstanding voiting stock o Paris in exchange for $6,000,000 in cash. Rome elected to exercise control over Paris as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 year ends. At the acquisition date, Paris' stockholder's equity was $2,500,000, including retained earnings of $1,700,000. Rome pursued the acquisition, in part, to utilize Paris' technology and computer software. These items had fair values that differed from their values on Paris' books as follows:

On January 3, 2018, Rome acquired all of the outstanding voiting stock of Paris in exchange for $6,000,000 in cash. Rome elected to exercise control over Paris as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 year ends. At the acquisition date, Paris' stockholder's equity was $2,500,000, including retained earnings of $1,700,000. Rome pursued the acquisition, in part, to utilize Paris' technology and computer software. These items had fair values that differed from their values on Paris' books as follows: Remaining Asset Book Value Fair Value Life Patented technology $ 140,000 $ 2,240,000 7 years Computer software $ 60,000 $ 1,260,000 12 years At December 31 2020, Paris owes Rome $70,000. Paris' remaining identifiable assets and liabilities had acquisiiton-date book values that closely approximated fair values. Since acquisition, no assts have been impaired. During the next three years, Paris reported the following income and dividends, which were paid: Net income Dividends 2018 $ 900,000 150,000 2019 $ 940,000 150,000 2020 $ 975,000 $ 150,000REQUIRED: LABEL EACH STEP Points Prepare the analysis as of acquisition date including unamortized differential at 1/1/18 and through 2020. 15 2 . Calculate the balance in the account Investment in Paris as of 12/31/20. Show all computations. 10 3. Prepare the journal entries Rome recorded with respect to its investment in Paris for the year ended 12/31/20. 15 4. Calculate consolidated net income (Total Net Income) for 2020 20 5. Prepare all necessary elimination entries for the year ended 2020. 20 6. Complete the consolidated workpapers for the year ended 12/31/20. 20 Use appropriate formulas throughout your work. 100INCOME STATEMENT P CO. S CO. ELIMINATIONS CONS.TOT. FYE 12/31/20 (000's) DR. CR. Sales 2,720 2,250 4,970 Equity in sub earnings 575 575 0 Total revenues 3,295 2,250 5,545 Cost of goods sold 1,350 870 2,220 Depreciation expense 275 380 655 0 Amortization expense 370 25 395 0 2 Total expenses 1,995 1,275 3,270 4 5 Net income 1,300 975 2,275 6RETAINED EARNINGS STATEMENT Retained Earnings 171 Net income Dividends declared Retained Earnings 12731 BALANCE SHEET Current assets Computer software Patented technology Goodwill Equipment Investment in sub Total assets Liabilities Common stock Retained earnings Total liabilities and equity 7,470 1,300 600 8,170 490 300 800 100 1,835 7,165 10,690 520 2,000 8,170 10,690 3,240 975 150 4,065 375 45 30 4,500 5,000 135 600 4,065 5,000 10,710 2,275 750 12,235 865 345 860 100 6,335 7,165 15,690 655 2,800 12,235 15,690