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On January 1, 2017, Prestige Corporation acquired 100 percent of the voting stock of Stylene Corporation in exchange for $2,231,500 in cash and securities. On the acquisition date, Stylene had the following balance sheet:

Cash	$	42,400	Accounts payable	$	2,153,900
Accounts receivable		125,500
Inventory		222,000
Equipment (net)		2,430,000	Common stock		800,000
Trademarks		950,000	Retained earnings		816,000
	$	3,769,900		$	3,769,900

At the acquisition date, the book values of Stylenes assets and liabilities were generally equivalent to their fair values except for the following assets:

Asset	Book Value		Fair Value		Remaining Useful Life
Equipment	$	2,430,000	$	2,567,000	8 years
Customer lists		0		164,000	4 years
Trademarks		950,000		1,029,500	indefinite

During the next two years, Stylene has the following income and dividends in its own separately prepared financial reports to its parent.

	Net Income		Dividends
2017	$	186,000	$	25,000
2018		478,000		45,000

Dividends are declared and paid in the same period. The December 31, 2018, separate financial statements for each company appear below. Parentheses indicate credit balances.

	Prestige				Stylene
Income Statement
Revenues	$	(4,680,000	)		$	(2,984,000	)
Cost of goods sold		2,540,000				2,110,000
Depreciation expense		576,000				396,000
Amortization expense		169,000				0
Equity earnings in Stylene		(419,875	)			0
Net income	$	(1,814,875	)		$	(478,000	)
Statement of Retained Earnings
Retained earnings 1/1	$	(3,550,000	)		$	(977,000	)
Net income (above)		(1,814,875	)			(478,000	)
Dividends declared		150,000				45,000
Retained earnings 12/31	$	(5,214,875	)		$	(1,410,000	)
Balance Sheet
Cash	$	572,000			$	55,000
Accounts receivable		700,000				107,500
Inventory		913,000				570,000
Investment in Stylene		2,709,250				0
Equipment		6,530,000				1,980,000
Customer lists		190,000				0
Trademarks		3,400,000				914,000
Goodwill		174,000				0
Total assets	$	15,188,250			$	3,626,500
Accounts payable	$	(1,473,375	)		$	(1,416,500	)
Common stock		(8,500,000	)			(800,000	)
Retained earnings, 12/31		(5,214,875	)			(1,410,000	)
Total liabilities and equity	$	(15,188,250	)		$	(3,626,500	)

1. Determine the fair value in excess of book value for Prestiges acquisition date investment in Stylene.

2. Determine Prestige's December 31, 2018, Investment in Stylene balance.

3. Prepare a worksheet to determine the balances for Peregrines December 31, 2018, consolidated financial statements.

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