Cat Co. trains and looks after cats. They want to expand their business to include dogs, and have approached Dog Co. with an offer to buy 85% of the outstanding shares of Dog Co. for $15,000 cash. The offer is accepted and control is transferred over at the end of the day on Jan 1 Year 1. Year 1 (Jan 1) Balance Sheet Balance Sheet Before Acquisition Before Acquisition Cat Co. Dog Co. Current Assets Carrying Value Carrying Value Cash 35,000 1,000 Accounts receivable 60,000 150 Inventory 2,000 Short-term investments 5,000 Total Current Assets 95,000 8,150 Long-te rm Assets Property, plant and equipment 15,000 8,500 Acc. Depreciation, Property, plant and equipment {2,000} (3,400] Property, plant and equipment, net 13,000 5,100 Land 120,000 Long-term investments 26,000 Total Long-term Assets 159,000 5,100 Total Assets 254,000 13,250 Current Liabilities Accounts payable 2,000 1,300 Wages payable 85,000 4,500 Total Current Liabilities 87,000 5,800 Long-term Liabilities Shareholder loan 145,000 Total Long-term Liabilities 145,000 Equity Common shares 100 100 Retained earnings 21,900 7,350 Total Equity 22,000 7,450 Total Liabilities and Equity 254,000 13,250 All other carrying values equal their fair values except for the following net assets: Dog Co. Fair value Carrying value Short-term investments 7,500 5,000 Inventory 3,600 2,000 Total 11,100 7,000 Required: Step 1 Prepare the journal entries for the acquirer and acquiree upon acquisition. / 2 Step 2 Calculate goodwill using the FVE method. / 3 Step 3 / 5 Prepare the financial statements of each individual entity after the acquisition journal entries have been recorded. Prepare the consolidated financial statements showing all elimination entries