On January 3, 2019, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc., in exchange for $9,749,000 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 $2,626,500 including retained earnings of $1,826,500. 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: Asset Patented technology Computer software Book Value $ 197,500 $ 94,500 Fair Value $ 3,102,500 $ 4,054,500 Remaining Useful Life 7 years 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: 2019 2020 2021 Net Income $ 902,300 942,300 977,300 Dividends $ 150,000 150,000 150,000 December 31, 2021, financial statements for each company follow. Parentheses indicate credit balances. Dividends declared were paid in the same period. Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity earnings in Sea Cliff Net income Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Current assets Investment in Sea Cliff Computer software Patented technology Goodwill Equipment Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity Persoff $ (2,950,000) 1,462,700 332,500 439,000 (232,300) Sea Cliff $(2,365,000) 913,700 426,000 48,000 0 $ (948,100) $ (977,300) $ (7,585,000) (948,100) 600,000 $ (7,933,100) $ 593,500 9,885,900 415,000 938,000 146,000 1,915,500 $ 13,893,900 $ (3,960,800) (2,000,000) (7,933,100) $(13,893,900) $(3,371,100) (977,300) 150,000 $(4,198,400) $ 432,500 0 79,500 126,000 0 4,730,000 $ 5,368,000 $ (369,600) (800,000) (4,198,400) $(5,368,000) Note: Parentheses indicate a credit balance.