Financial statements of Par Corp. and its subsidiary Star Inc. on December 31, Year 12, are shown below: BALANCE SHEETS At December 31, Year 12 Par Star Cash $ 60,000 $ 3,000 Accounts receivable 120,000 105,000 Inventories 84,000 68,000 Land 50,000 90,000 Plant and equipment 550,000 900,000 Accumulated depreciation (200,000 ) (320,000 ) Investment in Star common shares 236,600 $ 900,600 $ 846,000 Accounts payable $ 100,000 $ 200,000 Accrued liabilities 10,000 14,000 Preferred shares 70,000 Common shares 450,000 200,000 Retained earnings 340,600 362,000 $ 900,600 $ 846,000 RETAINED EARNINGS STATEMENTS For the Year Ended December 31, Year 12 Par Star Balance, January 1 $ 335,600 $ 433,000 Net income (loss) 34,000 (31,000 ) 369,600 402,000 Dividends (29,000 ) (40,000 ) Balance, December 31 $ 340,600 $ 362,000 Other Information On January 1, Year 5, the balance sheet of Star showed the following shareholders equity: $8 cumulative preferred shares, 500 shares issued $ 70,000 Common shares, 2,000 shares issued 200,000 Deficit (Note 1) (92,000) $178,000 Note 1: Dividends on preferred shares are two years in arrears. On this date, Par acquired 1,400 common shares of Star for a cash payment of $236,600. The fair values of Stars identifiable net assets differed from carrying amounts only with respect to the following: Carrying amount Fair value Accounts receivable $ 54,000 $ 52,000 Inventory 64,000 71,000 Plant 595,000 645,000 Long-term liabilities 338,000 358,000 The plant had an estimated remaining useful life of five years on this date, and the long-term liabilities had a maturity date of December 30, Year 12. Any goodwill is to be tested annually for impairment. Both Par and Star make substantial sales to each other at an intercompany selling price that yields the same gross profit as the sales they make to unrelated customers. Intercompany sales in Year 12 were as follows: Par to Star $ 390,000 Star to Par 390,000 During Year 12, Par billed Star $2,000 per month in management fees. At year-end, Star had paid for all months except for December. The January 1, Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par $ 34,000 Inventory of Star 33,000 The December 31, Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par $ 55,000 Inventory of Star 57,000 On July 1, Year 7, Star sold equipment to Par for $79,000. The equipment had a carrying amount in the records of Star of $59,000 on this date and an estimated remaining useful life of five years. Goodwill impairment losses were recorded as follows: Year 7, $84,500; Year 9, $52,470; and Year 12, $20,710. Assume a 40% corporate tax rate. Par has accounted for its investment in Star by the cost method. All dividends in arrears were paid by December 31, Year 11. Required: (a) Prepare, with all necessary calculations, the following: (i) Year 12 consolidated retained earnings statement. (Input all amounts as positive values. Omit $ sign in your response.) Par Corp. Consolidated Retained Earnings Statement Year Ended December 31, Year 12 Balance January 1 $ Net loss Dividends Balance December 31 $ (ii) Consolidated balance sheet as at December 31, Year 12. (b) How would the return on equity attributable to Pars shareholders for Year 12 change if Stars preferred shares were non-cumulative instead of cumulative? multiple choice 1 No Change Change (c) On January 1, Year 13, Star issued common shares for $100,000 in cash. Because Par did not purchase any of these shares, Pars ownership percentage declined from 70 to 56%. Calculate the gain or loss that would be charged or credited to consolidated shareholders equity as a result of this transaction. (Input all amounts as positive values. Round intermediate calculations and final answer to nearest dollar amount. Omit $ sign in your response.) (Click to select) $