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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 Cash Accounts receivable Inventories Land Plant and equipment Accumulated depreciation Investment in Star common shares Par Star $ 55,000 $ 2,500 115,000 100,000 84,600 63,000 45,000 85,000 500,000 850,000 (195,000) (315,000) 229,600 $ 834,200 $ 785,500 $ 98,000 195,000 9,500 13,000 65,000 450,000 170,000 276,700 342,500 $ 834,200 $ 785,500 Accounts payable Accrued liabilities Preferred shares Common shares Retained earnings RETAINED EARNINGS STATEMENTS For the Year Ended December 31, Year 12 Par Star Balance, January 1 $286,700 $403,500 Net income (loss) 29,000 (26,000) 315,700 377,500 Dividends (39,000) (35,000) Balance, December 31 $276,700 $342,500 Other Information . On January 1, Year 5, the balance sheet of Star showed the following shareholders' equity: $8 cumulative preferred shares, 500 shares issued Common shares, 2,000 shares issued Deficit (Note 1) $ 65,000 170,000 (95, 000) $140,000 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 $229,600. The fair values of Star's identifiable net assets differed from carrying amounts only with respect to the following: Fair value Accounts receivable Inventory Plant Long-term liabilities Carrying amount $ 49,000 59,000 570,000 328,000 $ 47,000 66,000 620,000 348,000 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 Star to Par $ 340,000 375,000 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 Inventory of Star $ 29,000 28,000 The December 31, Year 12, inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par Inventory of Star $ 50,000 52,000 On July 1, Year 7, Star sold equipment to Par for $74,000. The equipment had a carrying amount in the records of Star of $54,000 on this date and an estimated remaining useful life of five years. Goodwill impairment losses were recorded as follows: Year 7, $82,000; Year 9, $50,970; and Year 12, $20,460. 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. Par Corp. Consolidated Balance Sheet as at December 31, Year 12 Assets $ 0 Liabilities and Equity $ 0 (b) How would the return on equity attributable to Par's shareholders for Year 12 change if Star's preferred shares were non-cumulative instead of cumulative? O No Change O 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, Par's 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)