JJP Corp. purchased 70% of the outstanding shares of LKM Ltd. on January 1, Year 2, at a cost of $98,280. JJP has always used the equity method to account for its investments. On January 1, Year 2, LKM had common shares of $50,000 and retained earnings of $32,000, and fair values were equal to carrying amounts for all its net assets, except inventory (fair value was $5,800 less than carrying amount) and equipment (fair value was $18,300 greater than carrying amount). The equipment, which is used for research, had an estimated remaining life of six years on January 1, Year 2.

The following are the financial statements of JJP Corp. and its subsidiary LKM Ltd. as at December 31, Year 5:

BALANCE SHEETS
At December 31, Year 5
	JJP			LKM
Cash	$			$	25,000
Accounts receivable		47,000			34,800
Note receivable					33,600
Inventory		90,000			51,500
Equipment (net)		319,000			83,500
Land		200,000			45,000
Investment in LKM		144,893
	$	800,893		$	273,400
Bank indebtedness	$	197,635		$
Accounts payable		80,000			65,900
Notes payable		33,600
Common shares		150,000			50,000
Retained earnings		339,658			157,500
	$	800,893		$	273,400

INCOME STATEMENTS
For the year ended December 31, Year 5
	JJP			LKM
Sales	$	858,000		$	419,700
Management fee revenue		28,800
Equity method income from LKM		2,461
Interest income					3,360
Gain on sale of land					9,600
		889,261			432,660
Cost of sales		514,800			279,800
Research and development expenses		47,500			18,000
Interest expense		22,000
Miscellaneous expenses		121,000			36,400
Income taxes		73,320			39,384
		778,620			373,584
Net income	$	110,641		$	59,076

Additional Information

• During Year 5, LKM made a cash payment of $2,400 per month to JJP for management fees, which is included in LKMs Miscellaneous expenses.
• During Year 5, JJP made intercompany sales of $65,000 to LKM. The December 31, Year 5, inventory of LKM contained goods purchased from JJP amounting to $19,500. These sales had a gross profit of 35%.
• On April 1, Year 5, JJP acquired land from LKM for $33,600. This land had been recorded on LKMs books at a carrying amount of $24,000. JJP paid for the land by signing a $33,600 note payable to LKM, bearing yearly interest at 10%. Interest for Year 5 was paid by JJP in cash on December 31, Year 5. This land was still being held by JJP on December 31, Year 5.
• The value of consolidated goodwill remained unchanged from January 1, Year 2, to July Year 5. On July 1, Year 5, a valuation was performed, indicating that the recoverable amount of consolidated goodwill was $5,000.
• During the year ended December 31, Year 5, JJP paid dividends of $80,000 and LKM paid dividends of $20,000.
• LKM and JJP pay taxes at a 40% rate. Assume that none of the gains or losses were capital gains or losses.

Required:

(a) Prepare, in good form, a calculation of goodwill and any undepleted acquisition differential as of December 31, Year 5. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

	Balance			Changes to						Balance
	January 1, Year 2			Year 2-4			Year 5			Dec. 31, Year 5
Inventory		$			$			$			$
Equipment
Goodwill
		$			$			$			$

(b) Prepare JJPs consolidated income statement for the year ended December 31, Year 5, with expenses classified by function. (Round your answer to nearest whole dollar.)

(c) Calculate the following balances that would appear on JJPs consolidated balance sheet as at December 31, Year 5: (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

(i) Inventory

Inventory $

(ii) Land

Land $

(iii) Notes payable

Notes payable $

(iv) Non-controlling interest

Non-controlling interest $

(v) Common shares

Common shares $

(d) Assume that an independent business valuator valued the non-controlling interest at $39,125 at the date of acquisition. Calculate goodwill impairment loss and profit attributable to non-controlling interest for the year ended December 31, Year 5. (Omit $ sign in your response.)

Goodwill impairment loss		$
Profit attributable to non-controlling interest		$