CHAPTER 5 ASSIGNMENT The following financial statements were prepared on December 31, Year 6: Cash & Short-Term Securities Accounts Receivable Inventory Plant and Equipment Investment in Sendry Inc. - at cost Total Assets Current Liabilities Common Shares Retained Earnings Total Liabilities and Equity Prancer Inc. $ 390,000 290,000 2,450,000 2,610,000 3,300,000 $9,040,000 $ 737,000 3,750,000 4,553,000 $9,040,000 Sendry Inc. $ 190,000 510,000 3,190,000 $3,890,000 $ 543,000 2,050,000 1,297,000 $3,890,000 Sales Dividend income Prancer Inc. $4,450,000 232,000 Sendry Inc. $1,450,000 4,682,000 1,450,000 Cost of sales 2,590,000 490,000 Miscellaneous expenses 365,000 79,000 Administrative expense 89,000 Income tax expense 295,000 19,000 165,000 Net Income $1,343,000 $ 697,000 Balance, January 1 $3,800,000 $ 890,000 Net Income 1,343,000 5,143,000 Dividends 590,000 Balance, December 31. $4,553,000 697,000 1,587,000 290,000 $1,297,000 Additional Information: Prancer purchased 80% of the outstanding voting shares of Sendry for $3,300,000 on July 1, Year 2, at which time Sendry's retained earnings were $445,000, and common shares were $2,050,000. The fair values of Sendry's net asset were equal to their fair value, except for the following: Inventory fair value was $326,000 greater than book value Equipment = fair value was $652,000 greater than book value - equipment had a remaining useful life eight years 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 sales and impairment losses are grouped with administrative expenses. Required: A. Calculate the amount of the acquisition differential and the amount of goodwill arising from this combination. B. Calculate: i. Consolidated Net Income attributable to Prancer's Shareholders Consolidated Retained Earnings for December 31, Year 6 ii. iii. NCI for December 31, Year 6 C. Prepare the Consolidated Income Statement for the year ended December 31, Year 6