On January 3, 2022, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Incorporated, in exchange for $8,608,000 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 Cliffs stockholders equity was $2,588,000 including retained earnings of $1,788,000.

Persoff pursued the acquisition, in part, to utilize Sea Cliffs technology and computer software. These items had fair values that differed from their values on Sea Cliffs books as follows:

Asset	Book Value	Fair Value	Remaining Useful Life
Patented technology	$ 180,000	$ 2,840,000	7 years
Computer software	$ 84,000	$ 3,204,000	12 years

Sea Cliffs 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:

Year	Net Income	Dividends
2022	$ 901,600	$ 150,000
2023	941,600	150,000
2024	976,600	150,000

December 31, 2024, financial statements for each company follow. Parentheses indicate credit balances. Dividends declared were paid in the same period.

Items	Persoff	Sea Cliff
Income Statement
Revenues	$ (2,880,000)	$ (2,330,000)
Cost of goods sold	1,428,400	900,400
Depreciation expense	315,000	412,000
Amortization expense	418,000	41,000
Equity earnings in Sea Cliff	(336,600)	0
Net income	$ (1,055,200)	$ (976,600)
Statement of Retained Earnings
Retained earnings 1/1	$ (7,550,000)	$ (3,331,200)
Net income (above)	(1,055,200)	(976,600)
Dividends declared	600,000	150,000
Retained earnings 12/31	$ (8,005,200)	$ (4,157,800)
Balance Sheet
Current assets	$ 562,000	$ 415,000
Investment in Sea Cliff	9,057,800	0
Computer software	380,000	69,000
Patented technology	896,000	112,000
Goodwill	132,000	0
Equipment	1,891,000	4,660,000
Total assets	$ 12,918,800	$ 5,256,000
Liabilities	$ (2,913,600)	$ (298,200)
Common stock	(2,000,000)	(800,000)
Retained earnings 12/31	(8,005,200)	(4,157,800)
Total liabilities and equity	$ (12,918,800)	$ (5,256,000)

Required:

Determine the fair value in excess of book value for Persoff's acquisition date investment in Sea Cliff.

Determine Persoff's Equity earnings in Sea Cliff's balance for the year ended December 31, 2024.

Determine Persoff's December 31, 2024, Investment in Sea Cliff's balance.

Prepare a worksheet to determine the consolidated values to be reported on Persoffs financial statements.

Determine the fair value in excess of book value for Persoff's acquisition date investment in Sea Cliff.

	Fair value in excess of book

Determine Persoff's Equity earnings in Sea Cliff's balance for the year ended December 31, 2024.

	Amounts Amortization expense Equity accrual Equity earnings in Sea Cliff

Determine Persoff's December 31, 2024, Investment in Sea Cliff's balance.

	Amounts Fair value at 1/1/22 $8,608,000 Post-acquisition earnings net of amortization Sea Cliff dividends since acquisition (450,000) Investment in Sea Cliff's balance at 12/31/24

Prepare a worksheet to determine the consolidated values to be reported on Persoffs financial statements.

Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.

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PERSOFF CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year December 31, 2024 Accounts Persoff Sea Cliff Consolidation Entries Consolidated Totals Debit Credit Income Statement Revenues $(2,880,000) $(2,330,000) $(5,210,000) Cost of goods sold 1,428,400 900,400 2,328,800 Depreciation expense 315,000 412,000 727,000 Amortization expense 418,000 41,000 640,000 1,099,000 Equity earnings in Sea Cliff (336,600) 336,600 Net income $(1,055,200) $(976,600) $(1,055,200) Statement of Retained Earnings Retained earnings 1/1 (7,550,000) (3,331,200) 3,331,200 (7,550,000) Net income (above) (1,055,200) (976,600) (1,055,200) Dividends declared 600,000 150,000 150,000 600,000 Retained earnings 12/31 $(8,005,200) $(4,157,800) $(8,005,200) Balance Sheet Current assets $562,000 $415,000 $977,000 Investment in Sea Cliff 9,057,800 150,000 9,207,800 Computer software 380,000 69,000 2,600,000 260,000 2,789,000 Patented technology 896,000 112,000 1,900,000 380,000 2,528,000 Goodwill 132,000 0 240,000 372,000 Equipment 1,891,000 4,660,000 6,551,000 Total assets $12,918,800 $5,256,000 $13,217,000 Liabilities (2,913,600) (298,200) (3,211,800) Common stock (2,000,000) (800,000) 800,000 2,000,000 Retained earnings 12/31 (8,005,200) (4,157,800) (8,005,200) Total liabilities and equity $(12,918,800) $(5,256,000) $9,997,800 $9,997,800 $(13,217,