On January 1, 2014, Paloma Corporation exchanged $1,710,000 cash for 90 percent of the outstanding voting stock of San Marco Company. The consideration transferred by Paloma provided a reasonable basis for assessing the total January 1, 2014, fair value of San Marco Company. At the acquisition date, San Marco reported the following owners€™ equity amounts in its balance sheet:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$400,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . .60,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..265,000
In determining its acquisition offer, Paloma noted that the values for San Marco€™s recorded assets and liabilities approximated their fair values. Paloma also observed that San Marco had developed internally a customer base with an assessed fair value of $800,000 that was not reflected on San Marco€™s books. Paloma expected both cost and revenue synergies from the combination.
At the acquisition date, Paloma prepared the following fair-value allocation schedule:

Fair value of San Marco Company . . . . . . . . . . . . . . . . . . . . . . . . .$1,900,000
Book value of San Marco Company . . . . . . . . . . . . . . . . . . . . . . . . . 725,000
Excess fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,175,000
to customer base (10-year remaining life) . . . . . . . . . . . . . . . . . . . 800,000
to goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 375,000
At December 31, 2015, the two companies report the following balances:
At year-end, there were no intra-entity receivables or payables.
a. Determine the consolidated balances for this business combination as of December 31, 2015.
b. If instead the noncontrolling interest€™s acquisition-date fair value is assessed at $167,500, what changes would be evident in the consolidatedstatements?

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Paloma $(1,843,000) (675,000) Depreciation expense Amortization expense Equity in income of San Marco . Retained earnings, 1/1 Retained earnings, 1231 Investment in San Marco Buildings and equipment 4,9390001400,000 Retained earnings, 12/31 Total liabilities and equities $14,939,000) 1.400,000)