Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $283,500. Steal reported the following net income and dividend payments:

Year	Net Income	Dividends Paid
20X7	$ 48,000	$ 28,000
20X8	58,000	38,000
20X9	33,000	13,000

On January 1, 20X7, Steal had $256,000 of $10 par value common stock outstanding and retained earnings of $156,000, and the fair value of the noncontrolling interest was $189,000. Steal held land with a book value of $26,500 and a market value of $34,000 and equipment with a book value of $338,000 and a market value of $378,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years.

Required:

1. Compute the increase in the fair value of patents held by Steal.

2. Prepare the consolidation entries needed at January 1, 20X7, to prepare a consolidated balance sheet.