On January $1,2023,$ Pinnacle Corporation exchanged $$3,511,500$ cash for $100$ percent of the outstanding voting stock of Strata

Corporation. On the acquisition date, Strata had the following balance sheet:

Pinnacle prepared the following fair$-$value allocation:

Fair value of Strata $($consideration transferred$)$

Carrying amount acquired

Excess fair value

to buildings $($undervalued$)$

to licensing agreements $($overvalued$)$

to goodwill $($indefinite life$)$

At the acquisition date, Strata's buildings had a $10-$year remaining life and its licensing agreements were due to expire in $5$ years. On

December $31,2024,$ Strata's accounts payable included an $$87,600$ current liability owed to Pinnacle. Strata Corporation continues its

separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial

value method in its internal accounting for its investment in Strata.

The separate financial statements for the two companies for the year ending December $31,2024,$ follow. Credit balances are indicated

by parentheses.

Required:

a$.$ Prepare a worksheet to consolidate the financial information for these two companies.

b$.$ Compute the following amounts that would appear on Pinnacle's $2024$ separate $($nonconsolidated$)$ financial records if Pinnacle's

investment accounting was based on the equity method.

Subsidiary income.

Retained earnings, $\frac{1}{1}\frac{?}{24}.$

Investment in Strata.