On January 1 2014 Picante Corporation acquired 100 percent of
On January 1, 2014, Picante Corporation acquired 100 percent of the outstanding voting stock of Salsa Corporation for $1,765,000 cash. On the acquisition date, Salsa had the following balance sheet:


At the acquisition date, the following allocation was prepared:


Although at acquisition date Picante had expected $44,000 in future benefits from Salsa’s in-process research and development project, by the end of 2014, it was apparent that the research project was a failure with no future economic benefits.
On December 31, 2015, Picante and Salsa submitted the following trial balances for consolidation. There were no intra-entity payables on that date.


a. Show how Picante derived its December 31, 2015, Investment in Salsa account balance.
b. Explain the treatment of the acquired in-process research and development.
c. Prepare a consolidated worksheet for Picante and Salsa as of December 31, 2015.
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