Problem $5-13($Algo$)($LO $5-3,5-4,5-5)$

On January $1,2023,$ Corgan Company acquired $70$ percent of the outstanding voting stock of Smashing, Incorporated, for a total of

$$1,155,000$ in cash and other consideration. At the acquisition date, Smashing had common stock of $$840,000,$ retained earnings of

$$390,000,$ and a noncontrolling interest fair value of $$495,000.$ Corgan attributed the excess of fair value over Smashing book

to various covenants with a $20-$year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a $60$ percent markup on cost$.$ At the end of $2023$ and $2024,40$ percent of the current year

purchases remain in Smashing's inventory.

Required:

a$.$ Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December $31,2024.$

b$.$ Prepare the worksheet adjustments for the December $31,2024,$ consolidation of Corgan and Smashing.

Complete this question by entering your answers in the tabs below.

Required $A$

Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December $31,2024.$