On January 3, 2019, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc., in exchange for $7,141,000 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 $2,538,500 including retained earnings of $1,738,500. 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 $157,500 Fair Value $ 2,502,500 $ 70,500. $ 2,110,500 Remaining: Useful Life 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 $ 900,700 940,700 975,700 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 Persoff Sea Cliff $(2,285,000) $ (2,790,000) 1,384,300 292,500 391,000 883,300 394,000 32,000 (470,700) December 31, 2021, financial statements for each company follow. Parentheses indicate credit balances. Dividend 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 Persoff Sea Cliff $(2,285,000) $ (2,790,000) 1,384,300 292,500 391,000 (470,700) $ (1,192,900) $ (7,505,000) (1,192,900) 600,000 883,300 394,000 32,000 0 $ (975,700) $(3,279,900) (975,700) 150,000 $(4,105,600) $ (8,097,900) $ 521,500 7,993,100 $ 392,500 0 335,000 55,500 Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity Note: Parentheses indicate a credit balance. 842,000 114,000 1,859,500 $ 11,665,100 $ (1,567,200) (2,000,000) (8,097,900) $(11,665,100) 94,000 0 4,570,000 $ 5,112,000 $ (206,400) (800,000) (4,105,600) $(5,112,000) Note: Parentheses indicate a credit balance. a. Determine the fair 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, 2021. c. Determine Persoff's December 31, 2021, Investment in Sea Cliff's balance. d. Prepare a worksheet to determine the consolidated values to be reported on Persoff's financial statements. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine Persoff's Equity earnings in Sea Cliff's balance for the year ended December 31, 2021. +Amounts Equity earnings in Sea Cliff Note: Parentheses indicate a credit balance. a. Determine the fair 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, 2021. c. Determine Persoff's December 31, 2021, Investment in Sea Cliff's balance. d. Prepare a worksheet to determine the consolidated values to be reported on Persoff's financial statements. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine Persoff's December 31, 2021, Investment in Sea Cliff's balance. Amounts Investment in Sea Cliff Consolidation Worksheet For Year December 31, 2021 Consolidation Entries Accounts Persoff Sea Cliff Debit Credit + Consolidated Totals Income Statement $ Revenues $(2,790,000) (2.285,000) Cost of goods sold 1,384,300 883,300 Depreciation expense 292,500 394,000 Amortization expense 391,000 32,000 505,000 $ (5,075,000) ( 2,267,600 686,500 928,000 Equity earnings in Sea Cliff (470,700) 470,700 Net income $(1,192,900) $ (975,700) $ (1,192,900) Statement of Retained Earnings Retained earnings 1/1 (7,505,000) Net income (above) (1,192,900) Dividends declared 600,000 (3,279,900) (975,700) 150,000 3,279,900 150,000 $ Retained earnings 12/31 $(8,097,900) (4,105,600) (7,505,000) (1,192,900) 600,000 $ (8,097,900) Balance Sheet Current assets Investment in Sea Cliff Computer software Patented technology $ 521,500 $ 392,500 $ 914,000. 7,993,100 150,000 335,000 55,500 1,700,000 170,000 1,920,500 842,000 94,000 1,675,000 335,000 2,276,000