Branson paid $$569,900$ cash for all of the outstanding common stock of Wolfpack, Incorporated, on January $1,2023.$ On that date, the subsidiary had a book value of $$402,000($common stock of $$200,000$ and retained earnings of $$202,000),$ although various unrecorded royalty agreements $(10-$year remaining life$)$ were assessed at a $$139,000$ fair value. Any remaining excess fair value was considered goodwill.

In negotiating the acquisition price, Branson also promised to pay Wolfpack$$s former owners an additional $$53,000$ if Wolfpack$$s income exceeded $$160,000$ total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability$-$adjusted present value of this contingent consideration at $$37,100.$ On December $31,2023,$ based on Wolfpack$$s earnings to date, Branson increased the value of the contingency to $$42,400.$

During the subsequent two years, Wolfpack reported the following amounts for income and dividends:

Year Net Income Dividends Declared

$2023$ $ $83,600$ $ $20,000$

$202493,60030,000$

In keeping with the original acquisition agreement, on December $31,2024,$ Branson paid the additional $$53,000$ performance fee to Wolfpack$$s previous owners.

Required:

Prepare each of the following:

a$.$ Branson$$s entry to record the acquisition of the shares of its Wolfpack subsidiary.

b$.$ Branson$$s entries at the end of $2023$ and $2024$ to adjust its contingent performance obligation for changes in fair value and the December $31,2024,$ payment.

c$.$ Prepare consolidation worksheet entries as of December $31,2024,$ assuming that Branson has applied the equity method.

d$.$ Prepare consolidation worksheet entries as of December $31,2024,$ assuming that Branson has applied the initial value method.

No Date General Journal Debit Credit

$112/31/2023$ Loss from increase in contingent performance obligation $5,300$

Contingent performance obligation $5,300$

$212/31/2024$ Loss from increase in contingent performance obligation $?$

Contingent performance obligation $?$

$312/31/2024$ Contingent performance obligation $53,000$

Cash $53,000$

Required C

No Entry Accounts Debit Credit

$1$ Entry C$*$ No journal entry required

$2$ Entry S Common stock $-$ Wolfpack

Retained earnings $-$ Wolfpack

Investment in Wolfpack

$3$ Entry A Royalty agreements

Goodwill

Investment in Wolfpack

$4$ Entry I Equity earnings of Wolfpack

Investment in Wolfpack

$5$ Entry D Investment in Wolfpack

Dividends declared

$6$ Entry E Amortization expense

Royalty agreements

Required D

No Entry Accounts Debit Credit

$1$ Entry C$*$ Investment in Wolfpack

Retained earnings $-$ Branson

$2$ Entry S Common stock $-$ Wolfpack

Retained earnings $-$ Wolfpack

Investment in Wolfpack

$3$ Entry A Royalty agreements

Goodwill

Investment in Wolfpack

$4$ Entry I Dividend income

Dividends declared

$5$ Entry D No journal entry required

$6$ Entry E Amortization expense