On January 1, 2010, 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:

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 2010, it was apparent that the research project was a failure with no future economic benefits.
On December 31, 2011, Picante and Salsa submitted the following trial balances for consolidation:

a. Show how Picante derived its December 31, 2011, Investment in Salsa account balance.
b. Prepare a consolidated worksheet for Picante and Salsa as of December 31,2011.

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Cash Accounts receivable Land Equipment (net) $14,000 100,000 700,000 1,886,000 $2,700,000 Accounts payable.. Long-term debt Common stock 5 Retained earnings $ 120,000 930,000 1,000,000 650,000 At the acquisition date, the following allocation was prepared: Fair value of consideration transferred Book value acquired Excess fair value over book value 1,765,000 1,650,000 115,000 To in-process research and development To equipment (8-yr. remaining life) 56,000 To goodwill (indefinite life) $44,000 100,000 5 15,000 expense y income Retained earnings 1/1/11 .. Net income . Dividends paid Retained earnings 12/31/11 $ (4363,000) 5 (985000) Equipment (net) Total assets Accounts payable Retained earnings 12/31/11 Total liabilities and equities