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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 Par Star Cash 3: 55,999 $ 2,599 Accounts receivable 115,666 166,666 Inventories 84,666 63,666 Land 45,999 85,666 Plant and equipment 566,666 856,666 Accumulated depreciation (195,666) (315,666) Investment in Star common shares 229,666 $ 834,266 $ 785,566 Accounts payable $ 98,666 $ 195,666 Accrued liabilities 9,566 13,666 Preferred shares 65,666 Cotillion shares 456,666 176,666 Retained earnings 276,766 342,566 $ 834,266 $ 785,566 RETAINED EARNIHES STATEMENTS For the Year Ended December 31, Year 12 Par Star Balance, January 1 $286,766 $463,566 Net income (1055) 29,999 (26,999) 315,799 37?, 599 Dividends (39,999) (35,999) Balance, December 31 $276,766 $342,566 I Other Information - On January 1, Year 5, the balance sheet of Star showed the following shareholders' equity: $8 cumulative prefer-red shares, 566 shares issued $ 65,666 Common shares, 2,666 shares issued 176,666 Deficit (Note 1) 95,666} $146,666 l 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 identiable net assets differed from carrying amounts only with respect to the following: Carrying Fair- value amount Accounts receivable $ 49,666 $ 47,666 Inventory 59,666 66,666 Plant 576,666 626,666 Longster'm liabilities 328,666 348,666 The plant had an estimated remaining useful life offive 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 lntercompany selling price that yields the same gross prot as the sales they make to unrelated customers. lntercompany sales in Year 12 were as follows: The plant had an estimated remaining useful life offive 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 prot as the sales they make to unrelated customers. lntercompany sales in Year 12 were as follows: Par to Star $ 349,999 Star to Par 375,999 - 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 ofthe two companies contained unrealized intercompany profits as follows: Inventory of Par $ 29,999 Inventory of Star 28,999 - The December 31. Year 12. inventories of the two companies contained unrealized intercompany profits as follows: Inventory of Par 5 59,999 Inventory of Star 52,999 . 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 ve years. Goodwill impairment losses were recorded as follows: Year 7. $82,000; Year 9. $50,970: and Year 12, $20460. 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: (3) 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 OChange (c) On January 1, Year 13, Star issued common shares for $100,000 in cash. Because Par did not purchase any 01 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 resultof 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) v =3 |:I References Worksheet Learning Objective: 08-04 Prepare consolidated nancial statements in situations where the subsidiary has preferred shares in its capital structure. Learning Objective: 08-03 Learning Objective: 08-06 Analyze and Prepare consolidated nancial interpret nancial statements involving statements after the parent's ownership changes. ownership has decreased