Financial Statements of Pumpk @\\td. and its 80%-owned subsidiary Spice Ltd. as at December 31, Year 5, are presented below:+ Statement of Financial Position as at December 31. Year S Pumpkin spice Cash 1 81,000 206.000 Accounts Receivable 600,000 250.000 Inventory 350.000 160.000 Investment in Saturn 1.000.000 Property, Paint and Equipmen 1.980.000 940.000 Accumulated Amortization (1,018.000) (200.000) 1.093.000 1.356.000 Accounts Payable 560,000 401.000 Other Labilities 50.000 $5.000 Commun Slurca 1,800,000 500.000 Remind Earnings 683.000 400.000 3.093.000 1.356.000 Statement of Income for the year ended December 31, Year 5 Pumpkin Spice Sales 855.400 470.000 Dividend Income 88.00 0 943.400 470,000 Cost of Sales 598.780 282.000 Selling Expense 77.400 44.100 Administrative Expense including depreciation and goodwill impairment 30.000 20.700 Income Taxes 72.800 12.000 728.980 328.800 Net Income 214,420 (358,800) Additional Information: Pumpkin acquired 8,000 of the 10,000 ordinary shares of Spice on January 1, Year 1, for $1,000,000. Spice had retained earnings of $120,000 on that date.~ There were no changes to Spice's share capital since the date of the acquisition.~ On January 1, Year 1, fair values of Spice's assets and liabilities were equal to carrying amounts except for the following: +Carrying Value Fair Value Inventory 150.000 200,000 Patent 440,000 Accounts Receivable 450,000 300,000 Plant and Equipment 740.000 1,000,000 H The patent of Spice had a remaining legal life of sixteen years on January 1, Year 1, and any goodwill was to be tested annually for impairment. As a result, impairment losses occurred as follows: Year 2 25.000 Year 5 5,000 . Spice's Account Receivable has a maximum turnover rate of 65 days.~ The inventories of both companies have a maximum turnover period of one year.~ On January 1, Year 1, Spice's Plant and Equipment had a remaining useful life of 10 years.~ On January 1, Year 3, the inventories of Pumpkin contained items purchased from Spice on whichSpice had made a profit of $190,000. During Year 5, Spice sold goods to Pumpkin for $192,000. Spice made a profit of $33,000 on goods remaining in Pumpkin's inventory at December 31, Year 5.~ At December 31 Year 5, included in Pumpkin's Accounts Payable balance is an amount of $210,000 owed to Spice for sales made to Pumpkin during the year. . On January 1, Year 3, Spice sold equipment to Pumpkin at a price that was $210,000 in excess of its carrying amount. The equipment had an estimated remaining life of eight years on that date.~ Pumpkin sold a tract of land to Spice in Year 2 at a profit of $70,000. This land is still held by Spice at the end of Year S and is included in the balance of Property, Plant and Equipment.~ Dividend payments in Year S are as follows:+ Pumpkin: $220,000 Spice: $110,000- Assume a corporate tax rate of 40%.+Prepare the following consolidated financial statements: a. Income statement for the year ended December 31, Year 5 showing Net Income attributable to Pumpkin's shareholders and to Non-Controlling interests. (13 Marks) b. Retained earnings statement as at December 31, Year 5. (7 Marks) c. Statement of financial position as at December 31, Year 5. (20 Marks) + Note: Show clearly all your workings for computation and allocation of acquisition differential, amortization and impairment of acquisition differential, inter-company profits on inventory, equipment and land, non- controlling interests (income statement and balance sheet), etc. +