Poseidon Ltd. (P Ltd.) bought 80% of the voting shares of Submarine Ltd. (S Ltd.) for $470,000 at January 1, 20X5. S Ltd. had the following statement of financial position at that date:

The bonds on S Ltd.€™s statement of financial position were issued on January 1, 20X5, at face value; interest is paid July 1 and December 31.

All inventory on the books of S at January 1, 20X5, was sold during the year. P sold $400,000 (cost of goods) to S for $500,000D during 20X5, and 20% of the inventory was on hand at the end of the year. P sold land to S (cost $30,000) for $90,000. P purchased $60,000 face value of S€™s bonds on July 2, 20X5, for $64,000. The premium will be amortized straightline over the remaining life of the bonds. Any goodwill will be tested on an annual basis for impairment. S€™s plant and equipment have 10 years (straight-line amortization) remaining.

S had a net income of $100,000 for 20X5 and paid no dividends.

The statements of financial position for the two companies at December 31, 20X5, are:

Required
Calculate the balances of the following selected accounts, at December 31, 20X5, that would appear on the consolidated statement of financial position. Ignore income taxes for this problem.

1. Inventory;

2. Land;

3. Capital assets;

4. Bonds payable; and

5. Retained earnings.

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Submarine Ltd. Statement of Financial Position January 1, 20X5 $ 10,000 Cash Accounts receivable 30,000 Inventory 50,000 Land 150,000 Capital assets, net 200,000 $440,000 $ 20,000 Current liabilities Bonds-20-year, 15% interest 100,000 Common shares 100,000 Retained earnings 220,000 $440,000 The fair values, on January 1, 20X5, of S Ltd.'s assets were: $ 90,000 Inventory Land $220,000 Capital assets, net $170,000 P Ltd. S Ltd. Cash 70,000 $ 15,000 Accounts receivable 100,000 45,000 Inventory 240,000 80,000 Land 600,000 240,000 Capital assets, net 800,000 250,000 Investment in subsidiary equity* 550,000 Investment in bonds of subsidiary 63,898 $2,423,898 $ 80,000 $630,000 Current liabilities $110,000 Bonds 100,000 Common shares 1,000,000 100,000 Retained earnings 1,343,898 320,000 $2,423,898 $630,000 *Includes only the parent's share of subsidiary net income.