Additional lnfamaan I The Year 7 net incomes of the two companies are as follows: Poplar Ltd. $1,000,000 Spruce Ltd. 524,000 I The mineral rights owned by Spruce have increased in value since the date of acquisition and were worth $929,500 at December 31, Year?. I On January 2, Year 5, Poplar sold equipment to Spruce for $550,000. The equipment had a carrying amount of $440,000 at the time of the sale. The remaining useful life of the equipment was 5 years. I The Year 7 opening inventories of Poplar contained $505,000 of merchandise purchased from Spruce during Year 6. Spruce had recorded a gross prot of $202,000 on this merchandise. I During Year 7, Spruoe's sales to Poplar totalled $1,005,000. These sales were made at a gross prot rate of 35%. I Poplar's ending inventory contains $305,000 of merchandise purchased from Spruce. I Other expenses include depreciation expense. I Tax allocation will be at a rate of 40%. Required: (a) Prepare the following consolidated financial statements for Year 7: (i) Income statement (Input all values as positive numbers.) Poplar Ltd. Consolidated Income Statement Year 7 Sales Gain on sale of assets Total revenues Cost of goods sold Other expenses Interest expense Income tax expense Total expenses 0 Net income Attributable to: Shareholders of Poplar NCI(ii) Retained earnings statement (Input all values as positive numbers. Omit $ sign in your response.) Poplar Ltd. Consolidated Statement of Retained Earnings Year 7 Retained earnings, January 1, Year 7 S .008,500 Add: Net income Add: Dividends Retained earnings, December 31, Year 7 S(iii) Balance sheet (Amounts to be deducted should be indicated with a minus sign.) Poplar Ltd. Consolidated Balance Sheet Dec. 31, Year 7 Cash Accounts receivable Inventory Plant and equipment Accumulated depreciation Mineral rights Deferred income taxes Total assets $ 0 Accounts payable Bonds payable Premium on bonds payable Non-controlling interest Common shares Retained earnings Total liabilities and shareholders' equity $ 0{b} Calculate the December 31. Year 7. balance in the account investment in Spruce if Poplar had used the equity method to account for its investment. {Omit $ sign In your response.) Balance. Dec. 31. Year 7 $ [c] Not available in Connect. Problem 07-10 (L01, 3, 5, 6, 7) On January 2, Year 4, Poplar Ltd. purchased 80% of the outstanding shares of Spruce Ltd. for $2,050,000. At that date, Spruce had common shares of $500,000 and retained earnings of $1,300,000 and accumulated depreciation of $650,000. Poplar acquired the Spruce shares to obtain control of mineral rights owned by Spruce. At the date of acquisition, these mineral rights were valued at $762,500, were not recognized on Spruce's separate-entity balance sheet, and had an useful life of 10 years. Except for the mineral rights. the carrying amount of the recorded assets and liabilities of Spruce were equal to their fair values. On December 31, Year 7, the trial balances of the two oompa nies were as follows: Poplar Spruce Cash $ 1,050,000 $ 505,000 Accounts receivable 2,100,000 406,000 Inventory 3,150,000 2,056,000 Plant and equipment 14,200,000 2,950,000 Investment in Spruce {cost} 2,050,000 Investment in bonds 493,000 Cost of goods sold 2,450,000 050,500 Other expenses 962,000 305,000 Interest expense 43,000 Income tax expense 679,000 400,000 Dividends 600,000 250,000 $21,209,000 $0,223,500 Accounts payable $ 2,542,000 $2,520,500 Accumulated depreciation: plant and equipment 4,000,500 1,050,000 Bonds payable 500,000 Premium on bonds payable 0,000 Common shares 4,500,000 500,000 Retained earnings, January 1 11,000,500 2,060,500 Sales 4,950,000 2,050,000 Dividend revenue 200,000 Interest revenue 26,500 $27,139,uoo $3,223,5no