On January 1, 20X4, Parent Ltd. purchased 90% of the shares of Sub Ltd. for $972,000. At that time Sub Ltd. had the following SFP:

The bonds were issued at par and will mature in 10 years. Sub Ltd. has a receivables and inventory turnover of greater than six times per year. The capital assets have an average of 10 years of remaining life and are being amortized straight-line. The annual tests for goodwill impairment have indicated no impairment of goodwill since the date of acquisition.

In 20X4, Sub Ltd. sold inventory to Parent Ltd. for $320,000; the inventory had cost $260,000. At the end of 20X4, 25% was still in Parent€™s inventory, but it was all sold in 20X5.

In 20X5, Parent Ltd. sold inventory to Sub Ltd. for $275,000; the inventory had cost $200,000. At the end of 20X5, 35% was left in Sub€™s inventory.

During 20X4, the subsidiary earned $875,000 and paid dividends of $50,000. During 20X5, the subsidiary incurred a loss of $172,000 and paid dividends of $60,000.

The parent company used the cost method for the investment in the subsidiary and netted almost everything to €œOther expenses.€

At December 31, 20X5, the following financial statements were available:

Required
a. Prepare a consolidated statement of comprehensive income for 20X5 under the entity method.

b. Calculate the amounts that would appear on the consolidated SFP at December 31, 20X5, under the entity method, for:

i. goodwill;

ii. capital assets, net;

iii. bonds payable; and

iv. NCI.

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Sub Ltd. Statement of Financial Position January 1, 20X4 Carrying value $ 60,000 Fair value $ 60,000 Cash Accounts receivable 120,000 160,000 Inventory-FIFO 220,000 180,000 Capital assets, net 1,500,000 1,350,000 Goodwill 100,000 $1,960,000 $ 140,000 Current liabilities 140,000 Bonds payable Common shares 800,000 850,000 400,000 Retained earnings 620,000 $1,960,000 Statements of Financial Position December 31, 20X5 Parent Ltd. Sub Ltd. Cash $ 403,000 $ 75,000 Accounts receivable 850,000 179,000 Inventory 970,000 245,000 Capital assets, net 2,631,000 1,863,000 Goodwill 100,000 Investment in Sub Ltd. 973,000 $5,826,000 $2,462,000 $ 450,000 $ 49,000 Current liabilities Bonds payable 800,000 Common shares 1,000,000 400,000 Retained earnings, December 31, 20X5 1,213,000 4,376,000 $5,826,000 $2,462,000 Statements of Comprehensive Income Year Ended December 31, 20X5 Parent Ltd. Sub Ltd. Sales $9,865,000 $1,650,000 Cost of sales 8,040,000 1,140,000 Gross profit 1,825,000 510,000 (104,000) (808,000) Depreciation (106,000) Other expenses (369,000) Gain on sale of building Net income and comprehensive income 230,000 $1,350,000 $ (172,000)