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Equipment, net 287,566 256, 256 Patent, net 2, 566 $1,999,999 $593, 759 LiabiLities and SharehoLders Equity Accounts payable $ 237,566 $243,756 Other accrued liabilities 75,666

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Equipment, net 287,566 256, 256 Patent, net 2, 566 $1,999,999 $593, 759 LiabiLities and SharehoLders" Equity Accounts payable $ 237,566 $243,756 Other accrued liabilities 75,666 62,566 Income taxes payable 166,666 96,666 Common shares 212,566 31,256 Retained earnings 375,666 81,256 $1,999,999 5 593, 759 ' IMCOME STATEMENT Year ended December 31, Year 7 Grant Lee Sales 33 1,125,999 5. 459, 999 Cost o-F goods sold (425,666) (366,666) Gross margin 766,666 156, 666 Distribution expense (37,566) (31,256) other expenses (225,666) (76, 666) Income tax expense (156,666) (26,666) Net income 5 287,566 $ 28,756 I Additional Information - The recoverable amount for goodwill was determined to be $12,500 on December 31, Year 7. The goodwill impairment loss occurred in Year 7. I Grant's accounts receivable contains $37,500 owing from Lee. - Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses. Required: (3) Calculate consolidated retained earnings at December 31, Year 7. (Input all values as positive numbers. Omit $ sign in your response.) Calculation of consolidated retained earnings Dec 31, Year 7 Retained earnings Grant $|:| Retained earnings Lee 5 Retained earnings on acquisition Increase $ Grant's share % [::::::] _l:|_ Less: Changes to acquisition differential $|:| (b) Prepare consolidated financial statements for Year 7. (Input all values as positive numbers.) Attributable to: _ Grant's shareholders _ Non-controlling interest _ On January 1, Year 4, Grant Corporation bought 10,000 (80%) of the outstanding common shares of Lee Company for $87,500 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $31,250 of common shares outstanding and $37,500 retained earnings. Also on that date, the carrying amount of each of Lee's identiable assets and liabilities was equal to its fair value except for the following: Carrying Amount Fair VbLue Inventory $62,566 $68,756 Patent 12,566 25,666 F The patent had an estimated useful life of five years at January 1, Year 4, and the entire inventory was sold during Year 4. Grant uses the cost method to account for its investment. The following are the separate-entity financial statements of Grant and Lee as at December 31, Year 7: BALANCE SHEETS At December 31, Year 7 Grant Lee Assets Cash :5 6,256 $ 22,566 Accounts receivable 231,256 162,566 Inventory 387,566 125,666 Investment in Lee 87,566 Equipment, net 287,566 255,256

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