The following financial statements were prepared on December 31, Year 6.

Additional Information:

Pearl purchased 80% of the outstanding voting shares of Silver for $3,300,000 on July 1, Year 2, at which time Silver's retained earnings were $445,000, and accumulated depreciation was $69,000. The acquisition differential on this date was allocated as follows:

• 20% to undervalued inventory

• 40% to equipment-remaining useful life eight years

• Balance to goodwill

During Year 3, a goodwill impairment loss of $79,000 was recognized, and an impairment test conducted as at December 31, Year 6, indicated that a further loss of $29,000 had occurred.

Amortization expense is grouped with cost of goods sold and impairment losses are grouped with administrative expenses.

Silver owes Pearl $84,000 on December 31, Year 6.

(a) Prepare consolidated financial statements on December 31, Year 6.

(b) Calculate goodwill impairment loss and non-controlling interest on the consolidated income statement for the year ended December 31, Year 6, under parent company extension
theory.

(c) Calculate goodwill and non-controlling interest on the consolidated balance sheet at December 31, Year 6, under parent company extension theory.

*(d) Prepare the consolidated financial statements using the worksheet approach.

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BALANCE SHEET Pearl Silver $ 190,000 $ 390,000 Cash Accounts receivable 290,000 - 2,450,000 Inventory 510,000 Plant and equipment Accumulated depreciation Investment in Silver Company-at cost 3,450,000 3,590,000 (400,000) (840,000) 3,300,000 $9,040,000 $3,890,000 $ 543,000 $ 737,000 Liabilities Common shares 3,750,000 2,050,000 Retained earnings 4,553,000 1,297,000 $9,040,000 $3,890,000 INCOME STATEMENT $1,450,000 $4,450,000 Sales Dividend income 232,000 4,682,000 1,450,000 Cost of sales 2,590,000 490,000 Miscellaneous expenses 365,000 79,000 Administrative expense 89,000 19,000 Income tax expense 295,000 165,000 3,339,000 753,000 $ 697,000 $1,343,000 Net income RETAINED EARNINGS STATEMENT $ 890,000 Balance, January 1 $3,800,000 697,000 Net income 1,343,000 5,143,000 1,587,000 Dividends 590,000 290,000 $4,553,000 $1,297,000 Balance, December 31