Additional Information

The notes payable are intercompany.

Required:

a$)$ Prepare the Year $6$ consolidated financial statements. $($Input all values as positive numbers. Leave no cells blank $-$ be certaln to

enter $"0^{?}$ wherever required. Round your Intermedlate computations to nearest whole dollar value. Omit $ sign in your response.

The balance sheet total may vary due to rounding.$)($b$)$ Calculate goodwill impairment loss and non$-$controlling interest on the consolidated income statement for the year ended December $31,$ Year $6,$ under the identifiable net assets method. $($Round Intermedlate calculations and final answers to whol$=$ number. Omit $ sign In your response.$)$

Goodwill irpairnent loss

$

NCI $-$ identifiable net assets nethodO$$Sullivan Corp. purchased $75\%$ of the outstanding shares of Rabb Ltd$.$ on January $1,$ Year $3,$ at a cost of $$131,920.$ Non$-$controlling interest was valued at $$49,000$ by an independent business valuator at the date of acquisition. On that date, Rabb had common shares of $$57,000$ and retained earnings of $$37,000.$ Fair values were equal to carrying amounts for all the net assets except the following:

Carrying Amount Fair Value

Inventory $ $37,000$ $ $22,500$

Equipment $46,40072,500$

Software $18,500$

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The equipment had an estimated remaining useful life of six years on January $1,$ Year $3,$ and the software was to be amortized over ten years. Foxx uses the cost method to account for its investment. The testing for impairment at December $31,$ Year $6,$ yielded the following fair values:

Software $ $9,400$

Goodwill $55,105$

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The impairment loss on these assets occurred entirely in Year $6.$ Amortization expense is grouped with administrative expenses, and impairment losses are grouped with miscellaneous expenses. The parent$$s share of the goodwill noted above is $$37,673.$

The following are the financial statements of O$$Sullivan Corp. and its subsidiary Rabb Ltd$.$ for Year $6$:

BALANCE SHEETS

At December $31,$ Year $6$

O$$Sullivan Corp. Rabb Ltd$.$

Cash $ $ $10,700$

Accounts receivable $47,00037,000$

Note receivable $47,000$

Inventory $73,00051,000$

Equipment, net $255,00083,000$

Land $185,00037,000$

Investment in Rabb $131,920$

$ $691,920$ $ $265,700$

Bank indebtedness $ $125,000$ $

Accounts payable $77,00067,000$

Notes payable $47,000$

Common shares $157,00057,000$

Retained earnings $285,920141,700$

$ $691,920$ $ $265,700$

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STATEMENTS OF RETAINED EARNINGS

Year ended December $31,$ Year $6$

O$$Sullivan Corp. Rabb Ltd$.$

Retained earnings, January $1,$ Year $6$ $ $188,000$ $ $127,000$

Net income $133,47548,000$

Dividends $(35,555)(33,300)$

Retained earnings, December $31,$ Year $6$ $ $285,920$ $ $141,700$

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INCOME STATEMENTS

For the year ended December $31,$ Year $6$

O$$Sullivan Corp. Rabb Ltd$.$

Sales $ $828,000$ $ $341,000$

Investment income $24,9757,100$

$852,975348,100$

Cost of sales $487,000207,000$

Administrative expenses $43,50015,500$

Miscellaneous expenses $123,00038,600$

Income taxes $66,00039,000$

$719,500300,100$

Net income $ $133,475$ $ $48,000$

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Additional Information

The notes payable are intercompany.

Required:

$($a$)$ Prepare the Year $6$ consolidated financial statements. $($Input all values as positive numbers. Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Round your intermediate computations to nearest whole dollar value. Omit $ sign in your response. The balance sheet total may vary due to rounding.$)$

O$$Sullivan Corp.

Statement of Consolidated Retained Earnings

Year ended December $31,$ Year $6$

$($Click to select$)$ Balance January $1$ Balance December $31$ $

$($Click to select$)$ Net loss Net income

$($Click to select$)$ Less: Dividends Add: Dividends

$($Click to select$)$ Balance January $1$ Balance December $31$ $

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$($b$)$ Calculate goodwill impairment loss and non$-$controlling interest on the consolidated income statement for the year ended December $31,$ Year $6,$ under the identifiable net assets method. $($Round intermediate calculations and final answers to whole number. Omit $ sign in your response.$)$

Goodwill impairment loss $

NCI $$ identifiable net assets method

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$($c$)$ This part of the question is not part of your Connect assignment.